April 23, 2019 5:00 PM, EDT

Perspective: The Time Is Now for Blockchain in Transportation

Blockchain has established itself as a success in certain industries. However, in the transport and logistics sector, skepticism remains, which means it’s important to note the advantages of blockchain but also clear up some possible misconceptions.

John Monarch


Given the technological advancements underway in other sectors, a similar makeover in the transportation industry is overdue. It’s time for the transport and logistics sector to embrace the simplicity and advancement that blockchain brings.

Blockchain technology originated with the development of bitcoin, the digital currency. Rather than simply initiating changes between accounts, blockchain goes a step further by recording every motion in a long chain of events. As a result, each transaction can successfully be traced back to its point of origin, and the same process can be traced in a forward direction as well for forecasting and customer-retention tracking.

Here is a real-world example in which blockchain technology could have saved 10 days spent recovering missing shipping documents: In 2014, critical documents pertaining to a shipment of roses and avocados from Kenya to the Netherlands went missing. It took ocean-shipping line Maersk 34 days to get the shipment to the retailer, 10 of which were spent solely on document completion. Needless to say, none of the product ended up in consumers’ hands.

Now, imagine the same scenario but paperless. All transactions and contractual obligations, from the sellers to buyers and port authorities, to agents, banks and customs, could be carried out using keys that make the process less complicated and more secure — and 10 days shorter.

In addition to being a ledger, blockchain allows shippers and carriers to work together with smart contracts. Currently, different parties to an agreement maintain separate databases. Smart contracts, however, eliminate the redundancy, without sacrificing privacy or control. This, in turn, optimizes processing times with higher accuracy, transparency, enhanced security and easy access to the market while also reducing costs and delivering real-time updates.

The success of blockchain in other industries, such as banking, real estate and legal, has not yet compelled logistics managers to believe that now is the time to embrace this new technology. But blockchain technology is what the transport and logistics industry needs, because it is still reliant on manual processes and a common industry standard — electronic data interchange (EDI) — that is greatly outdated and inefficient.

When people discuss EDI and blockchain, they often draw comparisons between the two. But this line of reasoning overlooks the fact that these technologies differ greatly. EDI was first developed in 1947-48 for the Berlin airlift. It came to prominence in the 1960s, with the objective of speeding the movement of shipping and transportation documents. Its application has expanded from enabling the electronic exchange of purchase orders, acknowledgments and invoices to include global procurement and sourcing.

Today, however, the public blockchain is the only way forward. For one thing, public blockchains are more secure than a private blockchain. Plus, private blockchain lacks most of the benefits of public blockchain due to a lack of decentralization, which is a core attribute of blockchain technology.

Within private blockchain systems, a single entity is the owner and holds the power to make amendments to the blockchain ledger. This negates the transparency that blockchain is supposed to offer.

With public blockchain, however, no single entity or enterprise may single-handedly change the record without the knowledge of other privileged parties.

In 2016, Marine Transport International UK Ltd. deployed the first operational public blockchain in the shipping industry. Fast-forward to 2019, I see no reason to debate the credibility of public blockchain or the blockchain itself in empowering the transport and logistics industry in this digital age. The argument that the public blockchain consumes more energy and money in its establishment loses credence if the quality and level of security and trust that blockchain presents are considered.

The next time someone tells you that blockchain needs time, ask them why. With the biggest names in logistics making moves, it’s time to watch blockchain transform shipping and logistics for the better.

John Monarch is the CEO and co-founder of ShipChain, a blockchain startup focused on the freight and logistics industry.