How Blockchain Technology Streamlines the Logistical Supply Chain

August 14, 2017 4 min read

Blockchain software development is changing the way business is conducted in industries worldwide. It is a very secure method of information sharing and creates a permanent digital public register of transactions that can be distributed and accessed among a distributed network of computers. Even though blockchain was originally developed to monitor and secure bitcoin transactions, has quickly spread into many other industries because it maintains a constantly growing list of records or transactions, called blocks, which are impossible to tamper with, hack, or revise.

Current Issues in Supply Chain

Nowadays, 90% of goods in world trade are transported by the shipping industry, but the supply chain is hampered by the complexity and sheer volume of point-to-point communication across a loosely structured web of land and sea transportation providers, customs brokers, freight forwarders governments and etc. Processing the documentation and information for a single container of goods is expected to cost more than twice the actual transportation cost of the container.

Advantages of Blockchain

The advocates of this technology hail the sharing capabilities of this technology, which allows for many opportunities for logistics/supply chain application. The advantages for the industry include improvements in transparency and data sharing throughout the supply chain, better order tracking, reducing errors and enhanced fraud detection.

Blockchain also presents sizeable cost-saving opportunities for the industry. For example, the air freight sector may be ideally suited for blockchain because due to high safety and security requirements. Because blockchain cannot be hacked, it allows intermediaries in the air cargo chain, from shippers to carriers, from handlers to customs, to communicate safely cheaply and effectively.

As for the customers, with blockchain technology, they will now be able to see every stage of their product’s journey before it arrives in their hands.

Most people know almost nothing about the products they use. There is an enormous network of distributors, retailers, storage facilities, transporters and suppliers that stand between the consumer and the store which will no longer remain hidden. Thanks to blockchain, consumers will be able to make more informed decisions about the products they buy.

Blockchain Technology is Already in Use Today

Belgium-based Port of Antwerp, which is the second-largest European port by container capacity, has launched a pilot blockchain project focused on logistics automation. According to the Port of Antwerp, they are seeking ways to utilize blockchain technology to automate and optimize the terminal’s container logistics operations. The goal is to speed up the interactions between port customers to prevent the malicious falsification of data.

Currently, moving containers from one point to another involves more than 30 different parties, which include carriers, forwarders, terminals, haulers, shippers, drivers and many more. As a result, there are hundreds of interactions between these parties conducted via e-mail, phone and fax. The paperwork alone accounts for around 50% of a container’s transfer cost, according to sources in the Port of Antwerp.


Also, the Danish shipping giant, Maersk, has teamed up with IBM to develop logistics software which addresses this problem with a distributed permission platform accessible by the supply chain ecosystem, designed to exchange event data and handle document workflows. Maersk and IBM are using blockchain technology to create a global system that cannot be tampered with to digitize trade workflow and track shipments from origin to destination, thus eliminating frictions such as point-to-point communication. The results of their work will allow companies to track millions of container shipments annually and integrate with custom authorities on chosen trade lanes.

In a recent analysis conducted by Maersk, shipping one container of flowers from Kenya to Rotterdam result in a total of almost 200 communications. Using this as an example, they examined how blockchain has been implemented to create trust and security in the digitized document workflow and optimize global supply chains. The entities involved in the transactions are growers, export authorities and customs and importers. Shipping from the port of Mombasa requires signatures from three separate agencies which must approve the export as well as six documents describing the origin, chemical treatment quality, and customs clearance.


With developments in blockchain technology, the Kenyan farm can submit the packing lists via PC or mobile device, which will be visible to all participants. This launches an efficient contract and export approval workflow between the three agencies. As each agency signs off, it will automatically become available for other agencies to see. At the same time, the necessary information about the inspection of the flowers, the sailing of the refrigerated container that needs to be picked up by the driver and the approval from the customs authorities will be reported to the port of Mombasa, thus allowing them to start preparing for the arrival of the container.

Retailers are also employing blockchain technology to track goods throughout the supply chain. For example, Walmart has launched a pilot project to leverage the distributed ledger technology to track the origin of pork in China and its production in the U.S. This technology can shine a light on places where the supply chain can run more smoothly by dealing with mistakes and missed deadlines as needed. According to the latest statistics, 42% of companies in retail and manufacturing spheres are planning to spend about $5 million on such technology.


    Innovecs’ Expertise in Logistics and Blockchain Technologies

    At Innovecs, we understand the importance of blockchain technology in logistics. We serve logistics companies, retail chains, manufacturers as well as medium and large enterprises to develop PoC and pilots joining logistic and blockchain software to help better analyze and understand benefits for the supply chain management process. We develop software solutions to meet your supply chain needs thus creating cost-saving advantages for your business. Find out what Innovecs can do for your business today!

    Worldwide Benefits of Blockchain

    Since blockchain provides the secure exchange of data and a tamper-proof repository for documents and shipping events, this system could significantly reduce the delays and money wasted on fraud which amount to billions of dollars annually. According to the World Trade Organization, the reduction of barriers throughout the supply chain could potentially increase the worldwide GDP by 5% and the total volume by 15%.

    Blockchain technology has many features and characteristics that can be useful in the logistics industry. The true scope of blockchain technology is unlimited and can bring many benefits to all parties involved, especially for customers. With the world revolving more and more on the IT industry and mobile devices, blockchain will become a method of improving and connecting industries worldwide.

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