IoT and Blockchain Applications in Logistics and Transportation

Blockchain, IoT and mobile technologies can be integrated into a single powerful solution for real-time logistics tracking. This could solve issues with transparency and record verification and tracking that continue to haunt the logistics sector even in the digital era.

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IoT-and-Blockchain-Applications-in-Logistics-And-Transportation
Illustration: © IoT For All

Logistics/supply is currently one of the largest industries in the world. It’s the common factor in most international trade—the basic act of moving goods from here to there. The constant demand for logistics in every sector and the increasing distribution and division of labor and goods across the world has turned logistics into an essential component of modern human life.

Individual Links in the Chain Make Transparency Difficult

This sprawling and interconnected system of businesses, trade routes, shipping manifests and legal red tape is made possible by a complex, multilayering of computer technology and old-fashioned paperwork. It’s an industry that’s often shrouded in unknowns and gaps, and sometimes even distrust, with transparency being at a premium for everyone involved.

Few companies involved in the logistics and supply process are willing to share contract details, information about money or data on sales and supplies. This makes it incredibly difficult for companies to gain visibility throughout their supply chain. Lacking this kind of high-level data transparency is ultimately a bad thing for businesses at each end of the chain.

Lack of Transparency Eliminates the Possibility for True Traceability

Using the current standard, it’s incredibly difficult for individual entities to track components along the course of the supply chain. Being unable to have proper traceability on components being sent through the chain leaves a wealth of powerful information on the table that could otherwise be used to fuel big data and save money.

Outdated Technology Is Error-Prone and Cumbersome

A large amount of logistics operations are still handled with traditional pen and paper forms. These hard-copy documents can then be scanned or manually put into an overarching database if one exists. In many cases, even when a more advanced system with computers is being used, the software itself is beyond end-of-life support. Not only are these methods slow, but they have a high probability for errors and can be extremely costly to maintain at scale.

Disparate and Differing Information From Separate Entities in the Chain Causes Confusion

This lack of transparency and traceability, along with a reliance on often-outdated technology, culminates in a lack of proper information with which to make decisions. Different entities in the same chain reporting on the same component could give wildly different data depending on how it was recorded (and how accurate that data is), resulting in a mass of confusion that regularly incurs significant costs and causes headaches for businesses.

These problems can all be mitigated—or in some cases solved entirely—by the introduction of cutting-edge technology solutions designed to increase accountability, reduce costs and ensure accurate data reporting from every link in the supply chain.

IoT Benefits for Logistics & Supply Chain

The Internet of Things (IoT) offers a powerful solution to traceability problems: asset tracking. An emerging technology finding more and more applications each day, IoT brings meticulous component tracking and data acquisition tools that aren’t possible using traditional manual tracking methods. The potential applications for these tools are nearly limitless. With the wealth of information being provided by these IoT devices, even more improvements should be possible in the near future.

En-Route Asset Tracking Removes Component Guesswork From Modern Transit

One of the biggest potential uses for IoT devices is tracking devices for goods and components across the supply chain. Using this technology, tracking no longer has to be done manually—or at all—and can instead be done through digital sensors keeping tabs on materials or products throughout the entire supply chain from start to finish.

These kinds of tracking systems are already seeing widespread use in a number of other transit-based industries like consumer package delivery. By taking advantage of them in a logistics setting, organizations can push delivery times, bring transparency to the logistics process, and keep a closer eye on the goods being transported along the chain.

For example, real-time location systems (RTLS) can determine the geolocation of goods that may vary from vehicles to factory equipment. As a rule, RTLS becomes part of a product and includes wireless nodes (e.g. tags/badges); they send signals that are subsequently received by readers. The basis for modern RTLS systems comprises wireless communication technologies like Wi-Fi, GPS, Bluetooth, ultrawideband and RFID.

IoT Enables Detailed Inventory Management and Warehouse Auditing

By using small sensors attached to materials or products, organizations can maintain accurate and up-to-date inventories at all times. These “smart inventories” can contain a wealth of information on the products themselves, their previous locations, how long they’ve been present at the facility and more.

Meticulous inventory auditing can be streamlined using IoT sensors, reducing the likelihood of lost products, improper storage or other issues that could affect overall revenue.

Analytics and Big Data Are Slowly Transforming Every Sector of Business

It’s unsurprising that information tends to be the most powerful tool in the business toolkit, and IoT-enabled devices drive more data than has ever been possible. By collecting massive amounts of data from every step in the supply chain, organizations will be able to maximize efficiency at nearly every step in the chain and ultimately save time and money.

The biggest emerging advantage here is the ability for businesses to be proactive instead of reactive. By collecting data and analyzing it for emerging patterns, organizations can predict trends in collected data and proactively act to prevent problems, enhance efficiency and increase revenue.

Inefficiencies in the supply chain process are estimated to account for nearly $2 billion in lost revenue in the U.K. alone. Combining IoT data analytics and tracking throughout the supply chain process will do the exact same thing it’s done for nearly every other industry it’s been applied to – find these inefficiencies and present avenues for solutions.

Intelligently connecting different individuals, entities and steps in a supply chain will inevitably result in better and faster end to end logistics.

Blockchain Usage for Logistics and Supply Chain

Blockchain looks to solve issues with transparency in the documentation of the supply chain process.

For those unfamiliar with the technology, blockchain acts as a distributed digital ledger for transactions. Its most popular and well-known application comes in the form of cryptocurrencies, like Bitcoin, but the idea at the heart of blockchain can be expanded to apply to far more than that.

Blockchain is a decentralized method of recording and verifying information. Each time a new “block” is added to the “chain,” that information must be verified by each system or stakeholder involved in the chain. This kind of digital auditing guarantees that each block is recorded accurately and that the information contained within cannot be modified by any single entity in the chain. It also works to ensure trust and accountability.

The Advantages of Using Blockchain for Information Recording Are Numerous:

  • Blockchain systems offer the flexibility to document nearly every step in the supply chain process. From purchase to transit and delivery, each step can be securely stored and documented within a blockchain.
  • Cryptography will enable blockchain to replace paper assets and signatures with digital ones. This will allow businesses to save money and increase security, thereby also increasing customer trust.
  • Blockchain can be used for more than just recording information. Smart contracts can be used to verify services rendered in an end-to-end manufacturing process.
  • Blockchain presents a high degree of security and reliability of information, with each link in the chain all but guaranteed to constantly maintain an unmodified state after its creation.
  • Blockchain introduces a way to replace aging, interlocking recording systems with a single, unified source of logistics information that can be shared the world over.

Blockchain has the potential to completely revolutionize the way information is exchanged in the logistics and supply chain world, and there’s already a number of big companies eager to dive into the technology. One of them is the Blockchain in Transport Alliance (BiTA), which has about 500 member companies in more than 25 countries with a total annual revenue surpassing $1 trillion.

Logistics giant Maersk recently launched a joint-venture with IBM to develop TradeLens, a blockchain-based logistics system intended to be an open platform for the world to participate in. Other companies are following suit, and it’s becoming clear that the improvements offered by blockchain will be instrumental in the future of the industry.

Public blockchain networks amount to $130B in value; by 2025, they are expected to store 10% of the world’s GDP.

6 Ways Blockchain Could Transform The Logistics Industry

1: Blockchain Will Bring Trust to Data Transparency

Trust in the veracity of information is currently a huge problem in the logistics industry, and the secrecy many companies demand to protect each side in their step of the chain can make transparency difficult. The implementation of a private blockchain gives each party involved in a transaction clear, decentralized access to vital information in the transport process. With a high degree of accuracy and uncompromising tamper protection, these blocks in the digital ledger can give controlled access to those who need the information contained within. Basically, each party involved in a private blockchain has its own copy of data, which cannot be changed or accessed by outsiders, so the history of transactions remains transparent.

2: Smart Contracts Present an Entirely New Way to Create, Sign, and Fulfill Agreements

According to Craig Fuller, co-founder of BiTA, disputes over transportation payments lock up approximately $140 billion every day. Moreover, it takes up to 42 days to reach a full settlement of an average invoice.

Smart contracts developed via blockchain are a secure way to automate legal agreements in the logistics process. The best-known platforms are Hyperledger Fabric and Sawtooth, where smart contracts can monitor each step in the process and check for rules laid out in the code that will ensure each contract is fulfilled to completion.

These smart contracts can give reliability to entities on both ends of the supply chain, and allow smaller parties to participate in the process. It’s notoriously difficult for small start-ups to get into the supply chain without significant references or the backing of a strong reputation. Smart contracts can help alleviate this problem by giving some assurance that contracts will be completed.

3: Information Can Be Secured Using Blockchain

Using a traditional ledger system, malicious attackers can gain access to and change stored data throughout the supply chain. Blockchain offers not only the accuracy of a decentralized information platform with checks and audits for verification, but it also provides cryptography tools to ensure data is entered or modified in a secure fashion. The rising need for increased security in today’s interconnected world will demand a system like blockchain to ensure information security.

4: Reliable, Permission-Based Access

Blockchain systems have ways to control the access of information at various layers of the block itself. Contract data, for example, could be secured in a way that only allows relevant parties access to that information, while more generic info like shipment size or weight could be left openly available. Controlling access to this information not only lends an additional layer of security, but it also enables trust between entities within the chain and allows them to work independently of one another.

5: Blockchain Can Bring Clarity to Multi-Stakeholder Asset Management

Using the digital ledger system of blockchain, assets can easily be tracked and paired with claimants without any confusion over ownership. This permanent record provides a clear way to handle the transferring and verification of assets that can be difficult using current recording methods.

6: Blockchain Provides a Scalable Solution for Order Management

The near-infinite scalability of blockchain ensures that even the largest delivery tasks won’t be bottlenecked by the capabilities of blockchain. Particularly with the rise of so many “same-day” delivery services, the potential for conventional tracking methods to fall behind is high.

7: Blockchain and IoT-Based Real-Time Asset Tracking

Blockchain, IoT and mobile technologies can be integrated into a single powerful solution for real-time delivery tracking. This is a possible example: a Raspberry Pi is connected to Blockchain in order to retrieve GPS data from an AI-Thinker A7 GPRS/GSM module and send it to a Node.js API through a Caddy server. The project involves Python SDK and CLI tools, while the Sawtooth REST API was used to update delivery status with new geolocations. In fact, any other IoT devices can be integrated with this system.

Blockchain and IoT Will Soon Transform the Logistics and Supply Chain Industry

Bringing the logistics and supply chain industry into the modern age will have wide-reaching ramifications across the globe. By reducing costs across the board and allowing entities in the logistics process to act with more individual agency, logistics in its entirety will see sweeping improvements. These improvements in efficiency will eventually lead to cost savings at each end of the process. This transformation isn’t just coming soon – it’s already happening, and the positive effects of that transformation will continue to resonate across the globe for years to come.