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Blockchain in Logistics

Blockchain – just a buzzword or a truly disruptive technology?

The hype surrounding Blockchain has triggered strong reactions on both sides. Many consider it just another buzzword that happens to be “in” right now. For others, it represents a digital revolution, no less significant than the internet itself.

Upon closer examination, however, it becomes clear that Blockchain holds tremendous potential. It is the world’s first tamper-proof, self-governing, decentralized database. Blockchain enables greater transparency and is a key driver of ongoing automation.

In the logistics industry, Blockchain can help companies strengthen and expand their market position. One crucial aspect is the so-called “customer experience,” meaning the creation of a positive, sustainable customer journey and the establishment of process trust. Transparency and security throughout the entire end-to-end process (from order to payment) play a central role. When implemented correctly, Blockchain technology provides both: security through encrypted data and transparency through the traceability of every process step and transaction. To ensure global availability and achieve cost savings, it makes sense to migrate all logistics processes to the cloud.

The benefits of “Cloud Logistics” are evident. These include real-time data availability and high scalability of the business model, just to name a few. Logistics companies that have consistently embraced technological innovation in recent years—and used it to modernize and optimize supply chain processes—now enjoy a clear competitive advantage.

Nevertheless, despite ongoing digitalization, successful supply chain management continues to face major challenges. This is especially true when it comes to tracking cargo in real time, ensuring cargo integrity, creating transparency and accountability along the supply chain, and securely documenting the transfer of goods in a tamper-proof manner. Blockchain has the potential to overcome these challenges while drastically improving efficiency in supply chain management.

POTENTIAL USE CASES OF BLOCKCHAIN IN LOGISTICS

In logistics, several compelling application areas exist for Blockchain technology:

  • Blockchain has the potential to make the exchange of supply chain and logistics data – such as waybills, certificates of origin, tracking and tracing, or customs processes – more secure and more automated, thereby simplifying and accelerating the physical transfer of goods.
  • Logistics booking platforms that operate like Uber and function without an intermediary physical instance (middlemen). Based on Blockchain, they enable flexible and secure ad-hoc business relationships between previously unknown partners.
  • Highly relevant and increasingly used are so-called “smart contracting platforms.” A smart contracting platform provides smart contracts on a Blockchain basis: all services within a contractual relationship can be processed autonomously, securely, immutably, and in real time. Every transaction is immediately written to the Blockchain and linked directly to material, information, and financial flows – closing the “missing link” to business logic. The platform connects all stakeholders along the supply chain.

HOW BLOCKCHAIN WORKS

Blockchain uses distributed technology to create a digital environment in which participants can conduct transactions without a central authority. Blockchain is based on a peer-to-peer (P2P) network that uses cryptography to verify identities, authorize transactions, and generate permanent, immutable records. Blockchain operates through consensus. No individual participant can change or delete a record without agreement from the network. Key benefits of Blockchain include transaction speed, no delays caused by intermediaries, identity verification, programmable contracts, insight into data representing rights or ownership, customizable privacy levels, embedded trust rules within transactions, and resilience against cyberattacks due to the absence of a central point of failure.

Blockchain Chart

BENEFITS

The Blockchain concept is essentially built on three pillars: decentralized data storage and immutability, the elimination of costly intermediaries, and guaranteed data consistency and authenticity among participating partners. The main advantage of Blockchain technology lies in increased trust. Because processes are immutable, the reliability of operations increases. Corruption and data misuse—easily possible in manual, human-driven tasks—are eliminated. Additionally, efficiency is notably improved by faster process workflows.
Current developments aim to connect all supply chain actors end-to-end and achieve seamless digitalization. When combined with cloud logistics, this results in numerous advantages:

  1. Real-time transport scheduling, pricing, and booking
  2. Real-time inventory and cargo status using RFID and IoT technologies
  3. Multimodal global supply chain transparency
  4. Synchronization of procurement and trade
  5. Trusted trade finance
  6. Development of a supply chain network

Blockchain technology is evolving and will have a major impact across many industries. Comprehensive digitalization of internal processes and full ecosystem integration are essential prerequisites.
The benefits are immense, but realizing them requires a clear vision and strategy for digital transformation – and consistent execution to achieve the defined goals.

Sources