The Impact of the Blockchain on Freight and Logistics

Security remains one of the most pressing issues within freight and logistics, as well as the greater supply chain. Whether it's the risk of fraudulent cargo tracking, data on shipments in transit and even the risk of cyber-attacks and theft, security across the entire supply chain is a growing concern for both shippers and freight and logistics organizations.

What complicates this matter further is the time-consuming nature of manually validating cargo and shipment data at every process point, slowing down shipment movements every time an error, omission, or potential fraud risk is detected. The result of this is spoiled or expired shipments, frustrated and unhappy shippers and customers, and lost profits for forwarders, carriers, and last-mile delivery organizations.

As cybersecurity becomes a bigger risk and fraudulent operations become more refined, supply chain players need to adopt more complex, risk-averse encryption and security measures for data transfer and management between parties. Blockchain technology as a turnkey solution can help facilitate better transparency, visibility, and security within shipping operations.

What is blockchain technology?

While blockchain technology is often mistakenly assumed to be one thing (akin to the internet), a blockchain is simply a public digital database of transactions. Blockchain technology allows for data exchanges to take place between two parties without a third party to moderate and monitor the transaction.

Each time a transaction takes place, the blockchain creates another "block" in the chain that's encrypted with tamper-proof data consisting of a cryptographic hash of the previous block, a timestamp, and the transaction data.

Blockchain records are decentralized, meaning they're not stored on a central server like traditional records would be. They're distributed across the devices of every party who accesses that particular blockchain.

The decentralized nature of blockchain technology, along with its advanced encryption procedures, makes it nearly impossible to tamper with it, make edits, add or remove certain transactions, and destroy it. As a result, false or fraudulent transactions are nearly impossible to make using blockchain technology.

How can the blockchain be applied to the freight and logistics industry?

While blockchain technology's benefits aren't limited to only the freight and supply chain industry, its potential to solve key legacy challenges and enhance operability is immense. At a high level, the blockchain offers several key benefits.

Better visibility and traceability

The blockchain's enhanced encryption layering of each block makes data and documentation falsification near impossible. This creates better visibility and more reliable transparency of shipments' movements through the supply chain, allowing each party to track cargo movements in real time.

Validation and quality assurance

During shipments in transit, cargo damage or spoilage can occur often, leaving parties at odds with who is liable for the damage incurred. But, with blockchain technology, it's easy to trace items back to specific producers or supply chain partners. It's also easier to adhere to legal compliance requirements that come with shipping items, and simpler to identify and flag non-compliance in documentation.

Improved payment processing

The blockchain can record financial transactions between all parties involved in the shipment of an item, from shipper to final consignee. Blockchain technology keeps an accurate record of all payments and transactions, increasing shipment security and minimizing the risk of fraud or payment errors slipping through the visibility cracks.

Better operational efficiency

Blockchain capabilities enable greater efficiency and productivity across all freight and shipment operations. Whether it's more streamlined communication, complete visibility, immediate validation of data, and faster payment processing confirmation, the blockchain can be utilized across the freight sector and the greater supply chain to speed up and simplify operations without taking on additional risk or greater cost.

Better data begins with Stargo

While data security and visibility are the key elements that blockchain technology can offer to the freight and logistics sector, equally vital to success is the quality of the data inputted into the blockchain. Unstructured, inaccurate shipping data with errors, omissions, or other shortfalls could create a domino effect of inefficiency across the blockchain.

First and foremost, freight and supply chain organizations need to ensure their data is structured and ready for use. That's where Stargo comes in.

Stargo is an AI-driven data management platform that structures, cleanses, and enriches your shipping data, centralizing it in a single location. Stargo uses advanced ML learning to extract unstructured from any format or language, structuring it and correcting errors, so your data is accurate and ready for use.

Whether or not you incorporate blockchain technology in your processes, it's imperative that you're always working with accurate, clean data to drive revenue-oriented decisions across your operational workflow.