Blockchain has become one of the most attractive investment opportunities for companies in the logistics space. In fact, the market for blockchain technology in supply chain management is expected to grow at a compound annual growth rate (CAGR) of 49% from $41 million in 2017 to $667 million in 2024, according to Zion Market Research.
And some of the largest firms in the logistics industry are joining forces to explore blockchain and its potential use cases. For example, in 2017, a group of technology, transportation, and supply chain executives formed the Blockchain in Transport Alliance (BiTA) to create a forum for the development of blockchain standards and education for the freight industry. BiTA now has over 450 members, including global heavyweights UPS, FedEx, SAP, Google, Cisco, and Daimler.
The logistics industry suffers from a number of inefficiencies caused by outdated processes that blockchain could solve. Some of the issues plaguing the space include a lack of transparency caused by siloed, disparate systems, high costs as a result of slow, manual processes, and difficulties related to the amount of time it takes to create and close a contract. Firms that deploy blockchain-based solutions are likely to achieve a more streamlined experience through a reduced need for intermediaries, better planning capabilities as a result of improved visibility, and lower costs through the digitization of documentation.
Major companies are allocating resources toward developing a viable blockchain-based platform. Although few solutions have actually been fully developed, companies including IBM and Maersk, as well as retail heavyweight Walmart and FedEx, are making considerable strides in bringing their blockchain solutions to market. Walmart, in particular, will require direct suppliers to start using its food tracking blockchain platform by the end of January 2019, and indirect suppliers — including farmers and logistics firms — to start using it by September 30, 2019.
However, use of the technology is still in its infancy within the logistics industry. Firms are still confused about the potential benefits of the technology — only 11% of respondents to an MHI Annual Industry survey believe they have a working knowledge of blockchain. Moreover, logistics firms must still overcome several barriers, including a lack of standards and governance as [...]