Blockchain is the hotcake in the market. The blockchain market size was at $4.9 billion in 2021, and it is forecasted to increase, and the total market size will be $67.4 billion by 2026. It indicates that many industries are going to be impacted. Logistics is one of them.
The Indian logistics industry is significant in the Indian economy as it contributes to about 13-14% of GDP. In the 2020–2021 fiscal year, the Indian logistics industry was worth around $250 billion. At a CAGR of 10% to 12%, it was predicted that this industry will expand from its current level to $380 billion by 2025.
In this blog, we will cover blockchain, logistics challenges, and how blockchain will impact the industry.
Originally developed in 1991, blockchain was a secure digital ledger for storing information. A blockchain is a distributed ledger that allows several users to access it simultaneously. Its fundamental value lies in the fact that once information has been recorded, it is very difficult to alter without the consent of all participants. According to IBM's explanation, every new record is added to a block and given its hash. A blockchain is a distributed ledger created by connecting individual blocks. Bitcoin is a cryptocurrency that utilizes the blockchain.
Multi-step transactions that need to be verified and traced may benefit from using blockchain technology. It has the potential to hasten data transfer processing times, lower compliance costs, and ensure the safety of financial operations. As a distributed ledger, blockchain technology has applications in contract administration and product provenance auditing. In addition, it may be used to manage titles and deeds and in voting systems.
Though blockchain is not the mainstream, people all over the world are choosing blockchain because of the non-negotiable benefits it has to offer.
Blockchain is a distributed public ledger used in the logistics sector to record all transactions and updates to records in near real-time. With this information at their disposal, businesses may streamline the shipping process by establishing more direct routes and doing away with needless processes.
There are several problems in the logistics business that blockchain software solutions can help with, from detecting counterfeits to keeping track of paperwork. For example, transportation companies use distributed ledgers to keep tabs on real-time deliveries, make data accessible to all parties involved, and build credibility.
Logistics is a complex procedure, and this sector faces numerous challenges. However, here are a few common challenges.
Blockchain technology distributed and decentralized ledgers speed up processes while cutting down on human error. With smart contracts, organizations in the retail and logistics industries may enter into legally binding agreements that automatically terminate if certain conditions aren't satisfied. These distributed ledger contracts boost openness and revenues while reducing delivery times and faults that may cost money. Considering those facts, these are the scenarios blockchain is going to change.
The efficiency of freight shipment is increasing due to blockchain technology. Transport firms use it to speed up their deliveries. Shipment tracking, facilitated by blockchain technology, is one example that improves the forwarders' relationship with their clientele. Maersk and IBM have partnered to incorporate blockchain technology into daily operations further to ease international commerce. It facilitates the firms' global, open operations.
The use of blockchain technology improves the efficiency of logistics and communication in business deals by ensuring the privacy of all information exchanged. Furthermore, it streamlines the procedure by eliminating the need for manual steps such as documentation. In other words, it provides a systematic framework for tracking shipments from origin to the final destination.
Blockchain technology has several logistics applications, particularly inventory management and shipment monitoring. Blockchain, the Internet of Things (IoT), and mobile-based technologies track real-time packages. No longer is manual monitoring necessary. Thanks to digital sensors, companies that ship goods can monitor their possessions from beginning to finish. As a result, they can boost transparency while simultaneously improving delivery times and customer happiness.
An increase in transparency also increases confidence in B2B supply chain management. For instance, it lessens partner disagreements over invoices and even cuts audit costs. It also aids at the end of labor exploitation on a local level. It's useful for doing thorough stocktakes, which may be made even easier with the Internet of Things (IoT) sensors. Using a blockchain platform lessens the chances of objects being misplaced or improperly stored, two potential stumbling blocks to a successful end.
Centralized systems are more vulnerable to attacks. Once an attacker has access, they may take complete command of the machine. As a result, they have permission to alter, steal, or destroy any information kept on the server. On the other hand, Blockchain networks are decentralized and not overseen by any entity. Data kept in the chain is more secure because of its decentralized structure, making it more difficult for an attacker to compromise the system.
Adopting cryptographic security methods in blockchain significantly lessens the likelihood of data theft. Records on the blockchain provide metadata about their creation, such as the timestamp and the identities of their authors. The system will reveal their actions if someone tries to alter the information. When the smart contract expires after the shipment has been delivered, the relevant information is recorded on the public ledger. The hash function is the key component that makes blockchain-powered services more secure. Due to the one-of-a-kind nature of every hash, an attacker can never conceal a modification from the system.
In logistics, it might take a long time to settle an invoice without using smart contracts. In the logistics sector, invoices are typically paid after 40 days. This causes a significant loss of time and energy. Smart contracts are blockchain-enabled systems that facilitate legally binding, fully automated agreements between all parties involved in a blockchain network. They provide all the necessary financial information.
Once you've verified the paperwork proving delivery of the shipment, the payments can be released per the smart contracts. In other words, it replaces the need for periodic manual cash releases as goods progress through the supply chain. Moreover, it lessens the likelihood that one party will not stick to its end of the bargain.
Blockchain-enabled technologies allow you to keep tabs on your suppliers' and carriers' track performance records. It also enables shipping firms to monitor how well each fleet vehicle operates. Find out how well each carrier has done in the past to pick up and deliver packages on schedule. This data will improve decision-making. It benefits your company's bottom line if you want to simplify things.
Considering the huge opportunities, big industries like Walmart, Nestle, and Alibaba, are already accepting blockchain technology in logistics. As a result, it has positively impacted their business growth. But still, there is a need for education about this new system; as a result, companies are finding it challenging to adopt it. But, surely, It is the future.