AUSTIN, Texas – dexFreight’s shipment of frozen food from Preferred Freezer Services to Manny’s Enterprises was typical in many ways. The goods completed their journey along with many other trucks on Florida highways on Oct. 15.
But the load also offered one of the first examples of how a blockchain can be used to manage related transactions – offering a digital platform to negotiate rates and schedule the pickup and delivery.
The logistics platform partnered with Netuno USA, a seafood wholesaler, Arel Trucking, an asset-based motor carrier with over 180 trucks, and RSK, the first smart contract platform secured by Bitcoin. Funds for the transaction were held in escrow by the smart contract on the RSK platform and were automatically released to the carrier.
“This is a huge milestone towards an imminent transformation of the logistics industry through the adoption of blockchain technology,” said Rajat Rajbhandari, CEO and co-founder of dexFreight. “Our platform aims for a truly decentralized model, open to all the stakeholders, and allowing for a new world of services that will bring much needed optimization and liquidity to this industry.”
The concept of blockchains emerged amid a “mashup” of maturing technologies, explained Ken Craig, vice-president of special projects at McLeod Software, during a presentation at the American Trucking Associations’ management conference and exhibition. The internet improved, peer to peer networks and distributed databases strengthened, computing speeds increased, storage costs dropped, and cryptography advanced.
Blockchains build on it all, offering a tool for participants to share documents – a general ledger of sorts. While blocks of information can be added, none of the interconnected pieces can be changed or deleted.
“Blockchain is a fairly complicated technology,” Craig admitted, noting how people grasp onto concepts they tend to understand best. But it essentially establishes a continuous, comprehensive chain of individual transactions known as blocks.
In trucking that infrastructure could support secure transactions and communication, smart transportation contracts, and even autonomous vehicles and maintenance, said Brad Taylor, vice-president of data engineering, AI and machine learning at Omnitracs.
Walmart, for example, has established a blockchain to establish a chain of custody for perishable products as they move through the supply chain. “This is a good thing for us,” Craig said. “This will help us define the standards that we’re looking for.”
The Blockchain in Transport Alliance (BiTA), founded in August 2017, is taking the bid for transportation-focused standards further still – and now has 480 members and 2,800 applications. That makes it the largest blockchain alliance in the world.
“Ninety-five percent of the supply chain is now covered by BiTA partners,” he said, referring to players including P&G, Penske, FedEx, Schneider, Omnitracs, Fleet Complete and more. About 35% are asset-based businesses, and 30% are third-party logistics companies. Shippers and tech companies account for the rest. “We’re hoping by the end of the year to have some first drafts of some of the standards.”
“Blockchain technology is here, and it will be disruptive, but it’s in its infancy,” said Craig, who expects blockchains to be widely adopted by 2026.
The challenge is that some business managers are facing pressure to establish a blockchain without knowing how it fits into business goals, he said. “All this hype is really driving and putting pressure on businesses.”
And there are limits. Public blockchains, for example, can handle about three to 20 transactions per second. In contrast, Visa can handle 56,000 transactions per second.
“Keep a close eye on blockchain in the financial sector,” Craig said, referring to many advancements will be realized around things like security.
For an Omnitracs white paper on blockchains in transportation, click here.