Blockchain in transport logistics: whether technology can accelerate delivery of goods

Blockchain in transport logistics: whether technology can accelerate delivery of goods

Modern supply chains are complex sets of trading processes that are easy to damage with the slightest mistake.

In order to achieve high results, companies should ensure an efficient and high-quality supply of products to customers. A well-thought supply chain will not only allow organizations to be called industry leaders, but will also change the overall logistics system.

Key problems in modern logistics

Quality trading is hampered by supply chain problems. According to data released by analysts of the World Economic Forum, if the number of logistical barriers are reduced, global GDP will increase by about 5%, and world trade by 15%.

An effective logistics system involves working with extensive databases, well-established contact between operation participants and a well-developed system for processing orders. Such a perfect combination of elements will help to ensure the availability of goods in the right place.

However, these components of the system are not always available. Companies often have incomplete product information, and they fail to track products in real time.

As a result, the process participants are not notified when the cargo is shipped, where it is located and at what time it will be at its destination point. Such an ill-conceived system reduces the quality of trade.

Logistics in Russia

This year the World Bank has once again presented a logistic rating of countries – Logistics Performance Index 2018.

When forming the rating, the following aspects were taken into account: efficiency of the customs, condition of the infrastructure and speed of international transportations. In addition, the timeliness of delivery and the ability to track shipments played an important role.

According to the study, Russia is in 75th place among the 160 countries analyzed, following Costa Rica and Paraguay.

Among the lowest indexes of the Russian logistics are international shipments. They received a score of 2.64 points out of five: as for this parameter, Russia was ranked 96th.

It is also necessary to improve the work of the Russian customs: it received 2.42 points (97th place in the ranking).

One of the main problems of logistics in the Russian federation is inefficient cargo tracking. For this very aspect, the country received 2.65 points and was ranked 97th. The potential for improving these indicators is demonstrated by the distributed ledger technology.

Blockchain in transport logistics: whether technology can accelerate delivery of goods 1

How will blockchain ‘fix’ the supply chain?

The blockchain technology can solve the main problem in both the Russian and the global supply chains – tracking of goods in real time.

Each completed transaction is recorded in the ledger using a unique code. It contains information about the time, date, participants and cost.

The availability of detailed data will solve another problem: corruption level reduction. All transaction participants will be able to instantly receive information about any updates and changes in the process, inaccuracies or deviations from the plan can be tracked as well.

Thus, the reliability of transactions and agreements will increase, and the waiting time for the delivered goods will be reduced.

Up-to-date and reliable information about the products, which will be available to companies, will help to work out solutions to potential issues and economic problems.

Digital supply chains provide companies with the ability to redirect resources and employee performance. So there is a chance to reduce the cost of transportation and production of goods.

Blockchain in Russian supply chains

The use of blockchain in logistics abroad has already become a trend. Sea carrier Maersk and IBM have demonstrated a digital cargo tracking system last year.

Despite such an active development of the technology, logistics blockchain projects in Russia are only starting out.

The blockchain is planned to be introduced into the work of Russian Railways: on its basis the company is going to create a database with information on parts for locomotives and railway cars.

According to Nataliya Starostina, head of the automated systems department at Russian Railways, the new system will save the company from errors in documents and ensure data security. The project is planned to be presented in 2019.

In addition, the transport and logistics company JSC Russian Railways Logistics plans to introduce blockchain into the workflow sector as well. It is currently evaluating the potential effect of the technology introduction.

Despite the advantages of blockchain for supply chains, the regulatory framework for the technology application has not been developed yet, and transport companies have a lot of aspects to be thought-out to improve their technological readiness.

At Blockchain Conference Moscow on November 20, the blockchain industry experts will discuss the technology application in the supply chain. The event will assess the potential of transport companies and offer opportunities for the blockchain introduction into their operation.

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