Blockchain technology has the potential to drasticallyÂ improve data sharing and reduce the risk of a central point of failure inÂ logistics operations, according to a new book by Jason Schenker,Â an economistÂ who specializes in the material handling industry.
Despite that promise, the technology faces manyÂ challenges to its adoption, such as an excess of hype and confusion driven byÂ its applications for complex concepts like cryptocurrencies andÂ initial coinÂ offerings (ICOs), says Schenker, who is president and chief economist atÂ Austin, Texas-based Prestige Economics LLC.
At its core,Â blockchain creates a distributed ledger of information thatÂ can be read by all the members of a particular group, but can never be changed byÂ a member acting alone. Whether it's used to track logisticsÂ transactions or to support digital money like bitcoin,Â the technology allows trading partners toÂ share access to permanent, secureÂ databases.
Those attributes could create significantÂ improvements in efficiency for supply chains, transportation,Â logistics, freight, and material handling, as well as creatingÂ opportunities in other fieldsÂ like healthcare, agriculture, real estate,Â finance, and government, Schenker writes in his book,Â "The PromiseÂ of Blockchain: Hope and Hype for an Emerging Disruptive Technology."
Common supply chain tasks that show great potential to be improved by blockchain solutions include record keeping and the handling ofÂ chainÂ of custody of ownership, which are critical practicesÂ in any business, Schenker said inÂ an email.
"TheÂ impact on corporate supply chains — on logistics, transport, and freight —Â is going to be massive," Schenker said. "After all, blockchain allows for aÂ permanentÂ distributed ledger, and if used in a private, commercialÂ endeavor, it could provide instant transparency of origin, content, andÂ custody, which is often required from a regulatoryÂ framework forÂ conflict minerals, chemical content, or trade."
That dataÂ transparency can also add value in public health and safety, in applicationsÂ such as agricultural products and food safety, he said. "BlockchainÂ can improveÂ transparency of goods transport and freight. And it can allowÂ for greater ease in transactions that rely on antiquated documentationÂ processes in industries that are ripe forÂ disruption," saidÂ Schenker.
Schenker's book comes at a time when companiesÂ in seemingly every corner of the logistics industry are joining initiatives toÂ provide blockchain education and to develop standardsÂ for its applications in freight and transport.Â One trade group, theÂ Blockchain in Transport Alliance (BiTA), has hundreds ofÂ members including major names likeÂ GE Transportation, BNSF Railway Co., UPS Inc., FedEx Corp., SAPÂ SE, McLeod Software Corp., and Trimble Inc.
Other firms are beginning to launch blockchain platformsÂ for real-world applications, such as theÂ joint venture created in January by Maersk Line and IBM Corp.Â to apply theÂ technology to their global trade and transportation practices.Â FedEx is also testing blockchain for tracking high-value cargo, the firm saidÂ in May.