What is Blockchain Technology and How Will it Impact the Trucking Industry?
The new buzz word in transportation industry technology might put many truckers and trucking companies in a cloudy state of confusion. What exactly is a blockchain? And how could it revolutionize the layered exchange of paperwork from shipper to broker to carrier? It gets even foggier when terms such as cryptocurrency and digital ledger are tossed around by IT experts. Huh?
Not to worry. Consider this your crash course in Blockchain 101. We’re going to dig into the blockchain cloud and clear the air.
First things first: Let’s define blockchain. “A blockchain is a digitized, public ledger of all cryptocurrency transactions,” says Investopedia. “Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.”
Cryptocurrency and Digital Ledgers – Huh?
There we go again with those words, digital ledger and cryptocurrency. Let’s define digital ledger and cryptocurrency:
- Cryptocurrency – a medium of exchange using cryptography to secure transactions and control the creation of new units.
- Digital ledger – a digital system for recording the transaction of assets in which transactions and their details are recorded in multiple places at the same time.
OK, this is starting to make some sense. But let’s make it even simpler, shall we? In laymen’s terms, a blockchain “is a shared workflow in the cloud that all businesses can interface with in real-time without the need for a single software system. It’s about the information, not the application each company uses,” says Jerry Wallace, Chief Technological Officer for our friends at Apex Capital Corp.
How are Carriers, Shippers, and Brokers Connected?
So, you have a series of smart contracts in the blockchain. Say that carrier A has a smart contract set up with shipper B or even broker C. This allows them to send and receive information according to their rules. Once a smart contract is established freight transaction information is automatically recorded and stored across many computers involved in a peer-to-peer network.
Once those pieces of data are verified, they are added in chronological order to a block of information connected to the rest of the blocks in the series. You now have a chain of information, or a viewable history of transactions. Tah-dah!
What kind of information can you find in a smart contract? Well, it’s all important stuff like order details, shipping status updates, proof of delivery, detention charges. The goal of blockchain technology is to automatically verify all transaction details. For example, matching rate quotes to invoice amounts and detention charges to automate and potentially speed up freight payment process.
The blockchain can automatically send shippers notifications of the shipment progress, and note when a carrier delivered a load to initiate and expedite payment. All blockchain information is encrypted (remember cryptocurrency?) and the full transaction history gets recorded in a digital ledger.
Still with me? Ultimately blockchain should create transparency, efficiency, and trust. Information can’t be altered once it has been verified as a block in the chain.
A Step Forward for Transportation Industry
“I believe blockchain technology is a very important step forward for the transportation industry, and the internet as a whole,” says Apex’s Wallace. “There are very few times that a technology like this is introduced and are we excited about its possibilities.”
What could blockchain do for you, the owner-operator or the small trucking company? An estimated 40% of back office labor could be eliminated by using blockchain technology to automate freight payments, according to Tim Leonard, chief technology officer at TMW Systems, a developer of enterprise management software for the transportation industry.
How can carriers, shippers, and brokers prepare for blockchain? Clearly there is a lot more to learn about the blockchain impact in the trucking industry. It may all seem overwhelming at first, but truckers and trucking companies are not alone. The support for blockchain is growing.
BiTA Engages Bright Minds in Transportation, Finance, and Technology
Which brings us to BiTA, or the Blockchain in Trucking Alliance. BiTA (www.bita.studio), is a new forum for promotion, education, and encouragement to develop and adopt blockchain applications in the trucking, transportation and logistics industry. BiTA believes blockchain is one of the most significant developments for the industry since the creation of the internet. By providing more clarity and standards around blockchain through education and promotion of the technology, BiTA intends to be the leading blockchain voice for the industry.
The list of BiTA members is impressive especially for an organization that’s barely five months old. BiTA members include such transportation leaders as C.H. Robinson, UPS, TMW Systems, U.S. Xpress, P&S Transportation, and our friends at Apex Capital Corp, among many others.
BiTA plans to engage the brightest minds in the transportation, finance, and technology sectors to build the first set of transportation industry-specific blockchain standards. BiTA is focused on providing educational resources and open forums through meetings and conferences to industry experts interested in leading the blockchain technology evolution of the trucking industry.
Will 2018 be the year of the blockchain in the trucking industry? Yes, it sure could be. All of us at TransConnect Services (TCS) believe strongly in the development of trusted technology that benefits truckers and trucking companies, helping them grow in the process. Blockchain is a buzz word, indeed.
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