In 2017, the electronic “cryptocurrency” Bitcoin exploded upon the financial scene as naïve professional investors and individuals alike bought into the craze, investing money in a market bubble that promised an easy path to riches. The daily news breathlessly reported each new milestone as the price of the digital coin skyrocketed to dizzying heights, eventually reaching almost $20,000 on December 17th, 2017. But as we all know, the bottom dropped out and a few weeks later, Bitcoin had lost 50% of its value.
An unfortunate casualty in the hype and subsequent crash of Bitcoin was the tarnished reputation of the underlying technology, called blockchain. Google Trends shows that public interest in blockchain has dropped by 75% in the months since, and the 2019 Gartner Hype Cycle report shows blockchain solidly in the so-called Trough of Disillusionment.[i]
However, the ground-breaking technology of blockchain is far from dead, as the benefits of the distributed database remain. In logistics and the supply chain especially, it shows much promise. Multiple companies will be able to more easily collaborate to show the location of their products, selectively showing the full history of all items in the chain. This immutable record will – among other benefits - show product movement, improve transparency, prove ownership, and allow defect traceability. These improvements should cut costs and give customers more confidence in making informed purchases.
The Future of Blockchain and Supply Chain
While it will take years for the technology to mature, two major groups have recently announced the expansion of pilot projects, moving into mainstream usage.
Coke One North America, the IT team powering Coca-Cola’s bottle manufacturing, is expanding its pilot project from two to 70 partners, according to a November 2019 Business Insider report. With permissioned access, each participant will have access to each other’s orders; if shortfalls occur, for instance, others can quickly jump in to fill the shortage. The team hopes to reduce order reconciliation from weeks to just days.[ii]
Also announced this month, Maersk, the largest container ship and supply vessel operator in the world, revealed that railroad giant CSX has joined its Tradelens platform.[iii] In 2018, Maersk and IBM partnered to launch Tradelens, a blockchain enabled tool built to enable vital access to critical end-to-end data. Many other companies have launched pilot programs, but it appears that Tradelens has momentum and is showing value. According to Maersk, 10 million shipping “events” are registered on the Tradelens blockchain weekly, with data contributed by 55 ports and terminals. [iv]
Throughout the logistics industry, interest in blockchain technology remains high. The Blockchain in Transport Alliance (BiTA), the Chattanooga, Tennessee-based organization with 500 global members, such as Target, UPS and J.B Hunt, is holding its annual symposium this month in Chicago. BiTA (of which Kenco Logistics is a member) is focused on developing an open blockchain standard for logistics-focused blockchains. Once this standard is in place, software and technology groups will be able to more confidently develop software platforms that will be standards-compliant, seamlessly able to connect a multitude of companies up and down the supply chain using blockchain.
In this ever-changing industry, it is more important than ever for shippers to adjust to this complex market. A 3PL using the best tier-one warehouse, yard and transportation software can provide the expertise and tools to make procurement more efficient, while also helping shippers to operate more efficiently and effectively.
Yes, the Bitcoin excitement may be over, but the faults of one application doesn’t mean that the underlying technology should be abandoned. Blockchain technology is here to stay and is already proving value in the supply chain industry, adding transparency to transactions and speeding up track and trace processes.