More than half of transportation and logistics professionals still use a pen and paper to manage their supply chain - here's how blockchain could change that
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Blockchain is seemingly being explored by innovation teams in every corner of every industry. This includes the logistics industry, which, despite continuing on an impressive upward trajectory - the market is expected to reach $15.5 trillion by 2023, up from $8.1 trillion in 2015 - is filled with inefficiencies that the distributed ledger technology (DLT) is potentially well suited to fix.
As a result, the DLT has become one of the most attractive investment opportunities for companies in the logistics space; in fact, the market for blockchain technology in supply chain management is expected to grow at a compound annual growth rate (CAGR) of 49% from $41 million in 2017 to $667 million in 2024, according to Zion Market Research.
This is leading some of the largest firms in the logistics industry to explore blockchain and its potential use cases. For example, in 2017, a group of technology, transportation, and supply chain executives formed the Blockchain in Transport Alliance (BiTA) to create a forum for the development of blockchain standards and education for the freight industry. BiTA now has over 450 members, including global heavyweights UPS, FedEx, SAP, Google, Cisco, and Daimler.However, there are still major hurdles to overcome before the technology can become commonplace. Many companies, especially small- to medium-sized businesses (SMBs), are still unaware of what blockchain is, how it works, or what the benefits of the technology are.
In this report, Business Insider Intelligence explores how blockchain can provide value to the global logistics industry. We break down some of the inefficiencies in the logistics industry that are leading firms to explore blockchain and explain how the technology can be used to solve these issues. Additionally, we examine some specific use cases along the supply chain and identify some of the hurdles to adoption. And finally, we take a look at what needs to occur in the logistics industry for blockchain to be deployed widely.The companies mentioned in this report are: BiTA, FedEx, IBM, Maersk, Modum, SAP, Volt Technology, and Walmart.Here are some of the key takeaways from the report:Advertisement
- The logistics industry suffers from a number of inefficiencies caused by outdated processes that blockchain could solve. Some of the issues plaguing the space include a lack of transparency caused by siloed, disparate systems, high costs as a result of slow, manual processes, and difficulties related to the amount of time it takes to create and close a contract.
- Firms that deploy blockchain-based solutions are likely to achieve a more streamlined experience through a reduced need for intermediaries, better planning capabilities as a result of improved visibility, and lower costs through the digitization of documentation.
- Major companies are allocating resources toward developing a viable blockchain-based platform. Although few solutions have actually been fully developed, companies including IBM and Maersk, as well as retail heavyweight Walmart and FedEx, are making considerable strides in bringing their blockchain solutions to market.
- However, use of the technology is still in its infancy within the logistics industry. Firms are still confused about the potential benefits of the technology - only 11% of respondents to an MHI Annual Industry survey believe they have a working knowledge of blockchain.
- Having industry-specific case studies will show firms that are exploring the technology how they can go from testing to full deployment. These high-profile companies, which are some of the biggest and most influential in the world, will also be able to help shape a global standard for the use of blockchain and aid in the development of new legislation.
In full, the report:
- Sizes the potential market for blockchain in the management of the supply chain.
- Explains how blockchain technology can be used to improve the inefficiencies that have long plagued the logistics industry.
- Details how specific companies are testing blockchain technology to enhance parts of the supply chain, including freight shipments and last-mile delivery.
- Discusses the potential barriers that will challenge the adoption of blockchain in logistics and how these hurdles can be overcome.
- Pinpoints what will likely need to happen next for the mass adoption of blockchain to occur.