Imagine not having to argue with customers over extra charges because they’re automatically added to the invoice. How about eliminating the physical paperwork needed to move a shipment across a border? Even better, what about getting paid the same day you deliver a shipment?
To most people blockchain is a buzzword related to bitcoin, but in fact it’s a piece of technological wizardry that’s being applied to all kinds of transactional businesses, including trucking.
Blockchain uses shared digital ledgers stored on a decentralized distribution network—in layman’s terms, it’s an online database that lets groups collaborate and share information. Each entry or record on the ledger becomes a “block” in a chain of digital information, and because it’s encrypted, the ledger can’t be altered without everyone else in the transaction knowing about it.
The applications for trucking are staggering when you consider the reams of paperwork and number of human touch points we deal with. Here are my thoughts on blockchain and the supply chain.
Bye, bye, ‘he said, she said’
One of the worst aspects of a transactional business like trucking is the amount of time you spend chasing customers who have made “nickel-and-dime-my-carriers” an Olympic sport.
With blockchain, integrity is built into the business process. Everyone with access to a chain of documents—shippers, carriers, brokers and receivers—works with the same set of information. For instance, when a receiver verifies delivery, it can be electronically recorded on the chain for everyone to see. And you can draw up your invoice and electronic funds transfer (EFT) request.
If blockchain sounds confusing, remember that the iPhone seemed confusing just a decade ago.
It’s hard to understand anything without seeing it in action. Take the traffic (and cop) avoidance app, Waze. Who knows exactly how the hell it routes your trucks around traffic jams and speed traps, but you know it’s more effective when everyone on the road shares information .
The computer geeks in Silicon Valley will eventually come up with an app that’s “blockchain plug-and-play” for your fleet management and accounting system. You won’t know exactly how it works, but you’ll wonder how you ever lived without it.
Small carrier survival
In Canada, the vast majority of carriers have six trucks or less. The decentralized blockchain environment will allow even the smallest fleets to scale operations and compete with the big boys.
Small carriers struggle with managing documents, speeding up cash flow, sharing data with customers—the kinds of things where blockchain can provide a structure. If you’re a small carrier, your knowledge of blockchain and willingness to embrace it can be a competitive advantage when customers ask you to sign on to their virtual ledger.
According to the American Productivity and Quality Center, less than 1% of organizations use blockchain for their supply chain. Most applications involve tracking shipping containers and managing temperature-controlled shipments.
But it’s coming. So get educated.
One of the best reads for newbies is Blockchain for Transportation: Where the Future Starts, from TMW Systems. It’s free on their website. IBM is a blockchain pioneer, especially for food traceability. Also consider joining BiTA, the Blockchain in Transportation Alliance. One glance at the industry heavyweights on the membership list says it all.
The price of bitcoin may be all over the place, but the technology behind it has the potential to bring stability, transparency and accountability to freight transactions. It’s time to ’chain up!
Mike McCarron is the president of Left Lane Associates, a firm that specializes in growth strategies, both organic and through mergers and acquisitions. A 33-year industry veteran, Mike founded MSM Transportation, which he sold in 2012. He can be reached at email@example.com, 1-844-311-7335, or @AceMcC on Twitter.