Blockchain and Transportation

There’s no shortage of blockchain technology articles in the transportation industry world as of late. I even wrote one myself touting blockchain technology back in February 2018  addressing the subject. Why have I and so many others written about blockchain? Because it’s coming and it will change things, that’s why.

What’s not to love in blockchain? In its base form, it’s reported to be an incorruptible digital ledger that can track financial transactions or almost anything of value. Blockchain seems to be a natural next platform for the transportation industry which sometimes has extremely complex global supply chains. There are even efforts underway to develop supply chain technology prototypes in a test tube environment.   Fortunately, the transportation industry doesn’t have to start from scratch. The technology has been around for quite some time to track Bitcoin transactions. So why isn’t it the standard today in the transportation industry and seems to be stuck in the very early stages despite unabashed enthusiasm?

Even though blockchain may be ‘perfect’; the transportation world that wants to utilize it isn’t. One issue is bad data. While blockchain is pretty nifty, it does not cleanse data. It depends on what is fed into it. While there is no shortage of data in the world, aggregating it and making sure it is good data still has to be addressed.  Also to be considered is the data will be coming from a broad spectrum of providers, which at this point often have different standards and identifying characteristics for data. Getting the world on the same page will be a chore.

Another factor is some organizations may resist blockchain. There could be a concern, whether valid or not, among some non-asset based providers that blockchain technology may commoditize and devalue their service slicing margins to slivers as they become a mere data pass-through portal. While it is fine and dandy to make pennies on the dollar if you own the blockchain platform due to the economy of scale, it is quite another to be a provider on the system and work on those same pennies.

Moreover, I can’t speak for the miracle of transportation blockchain that doesn’t exist yet, but I can speak to another existing model, Bitcoin blockchain. Blockchain is not immune to hacking.  In just one example, according to *‘Hedge Coin Group’ in August of 2017 a group calling themselves ’51 Crew’ attacked two Bitcoin blockchain platforms. The hackers took control of 51% of the network. From the same source, there was also $65 million of digital currency stolen from the Hong Kong-based exchange ‘Bitfinx’.   While virus infections are not likely, they are indeed possible. According to **‘Motherboard’ a member if Vice Media Group, “blockchain can be repurposed to be used to spread malware to unsuspecting cryptocurrency traders, according to INTERPOL”.  With this in mind, I foresee major players exercising extreme caution before committing themselves to join blockchain platforms.

Lastly, there is a lacking of true understanding of blockchain among many. While those who champion the ‘blockchain tidal wave’ tell tales of increased efficiency and visibility, those of us not as savvy on the subject wonder how many of our proprietary cards must be revealed to participate? There is still a fair amount of distrust from organization to organization which may give pause to some to jump into the ‘for all’ public pool.

Will blockchain ultimately be utilized widely by the transportation world?  Yes, I believe it will. Over time, shipper demands of their 3PL’s for more visibility and collaboration will force the issue to evolve.  Will the transference to that place and time be lighting quick? In my view no it won’t. Due to the obstacles and perceived threats I mentioned earlier in the article, which most are not related to the blockchain itself, it will be a slower more cautious process.

In the time between now and broadly used blockchain reality, look for 3PL’s to make an effort to heighten collaboration efforts and increase visibility with their shippers instead of rushing to blockchain technology.  Expectations of shippers are rising of they want from the 3PL’s they hire. At the same time, shippers are becoming more dependent on their 3PL’s. These challenges may trigger a ‘pre-blockchain’ surge of technology and application advances within the 3PL sector to meet those demands, ultimately acting to pave the way for the jump to the blockchain technology advertised today sometime in the more distant future.