21 Nov Practical applications for blockchain in the transportation marketplace
TMW Systems presents practical applications and an overview of implementation guidelines for blockchain within the transportation marketplace in its recently released paper – Blockchain for Transportation: Where the Future Starts.
With digital technology reshaping the transportation industry, blockchain has quickly become a key priority for many major organisations. “Blockchain is a decentralized distributed technology designed specifically to transform business operations,” as the report states. It was first introduced as a concept in 2008, has since been widely adopted within the financial industry, and is slowly beginning to enter other sectors, including health care and the supply chain.
This newly released report – Blockchain for Transportation: Where the Future Starts – by TMW Systems, a provider of transportation management software, offers practical applications and an overview of implementation guidelines for blockchain within the transportation marketplace. The report serves as an informative guide for logistics professionals who are looking to learn the ins and outs of this innovative distributed ledger technology.
The first section of the report describes what a blockchain is and how a blockchain transaction works (see below). In order to understand the various applications and processes for implementation of blockchain, it is crucial to have a grasp on its fundamental principles, architecture, types and components. The report provides the following definition: “At its core, blockchain is a shared digital ledger encompassing a list of connected blocks stored on a decentralized distributed network that is secured through cryptography.”
There are three main types of blockchain networks – public, private, and consortium. The public blockchain is the go-to platform for cryptocurrencies like Bitcoin and Ethereum. It is “a decentralized framework that allows anyone to add themselves to the network, read transactions, transfer assets and participate in the consensus process.” Private blockchain, on the other hand, is chiefly centralized with strict permissions that typically only allow a pre-approved group of members to read and send transactions and participate in the consensus process. Consortium blockchain is a hybrid of public and private that leverages the decentralized nature of the public blockchain, as well as the permission capabilities of private blockchains.
The report stresses that it is necessary to understand the basic components of blockchain in order to fully understand its potential applications. The four key elements of a blockchain are as follows:
1. Membership Services responsible for managing identity, certificates and permission levels
2. Consensus Manager responsible for validating data & maintaining consistent data across all nodes
3. Distributed Ledger stores time stamped validated transactions
4. Smart Contracts execute business logic through chain code
One of the most exciting benefits of blockchain is that it allows organisations to more effectively track goods across the entirety of the supply chain. In addition to that, there are several other potential applications for the tech that could improve operational success within the transportation industry. The figure below outlines the different applications for blockchain in transportation.
The relevant applications for blockchain in the transportation industry are then outlined in detail, starting with its potential benefits for freight tracking. Three key advantages for freight tracking highlighted in the paper are that it offers a (1) single trusted source, (2) it simplifies integration, and (3) data is shared.
TMW further contends carrier onboarding could be improved by using blockchain to validate transactions and store records. In this area, four key advantages of blockchain are mentioned, namely: (1) it consists of a decentralized effort to validate carriers, (2) incentive to perform the work, (3) a shared data source, and (4) it lowers cost.
The final sections of the paper describe several other benefits and applications of blockchain including a more trusting load board, streamlined factoring, integrated internet of things (IoT), protecting sensitive information, and finally to serve as a ‘Master Data Management (MDM)’ system. The conclusion emphasizes that a successful implementation of blockchain requires a strong partnership with a technology provider that understands its intricacies and potential applications.
Want to learn more? Read the full white paper by TMW Systems here.