Easy does it – 'baby steps' the best way to move towards blockchain in logistics

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Logistics operators should take “a more protracted approach” to introducing blockchain technology, with development of rules paramount.

Speaking at Intermodal Europe in Rotterdam,Viswanthan Raghavendra, CEO of FreightBro, said the technology was “absolutely vital”, but more time was required.

“Blockchain is definitely something we need to stay and have a place within the logistics sector,” he said, “but it must be brought in in baby steps.

“It is a system built on trust and it takes time for people and businesses to develop the levels of trust required.”

Blockchain is essentially an encrypted messaging system that allows supply chain partners to operate a shared ledger that records all the events in the processing and physical progress of a shipment, such as customs entries or bills of lading.

While public blockchain systems are feasible, those being adopted by businesses are often private or “permission-based”.

Business consultant at CGI Tom van Dijk told The Loadstar that in these latter cases a clear set of rules were required.

“Whose idea is the platform, and how do they intend it to work? With blockchain, one party cannot lay down the rules,” he said.

“They have to sit down with their other partners in the chain and construct these rules, otherwise you lose the collaborative essence and purpose of using blockchain.”

Mr van Dijk said while it was important to get the rules agreed, there were obvious issues and it may not be an easy process, which is why he agreed “baby steps” were required.

He also questioned some of the practicalities for those seeking “total visibility”, noting that in most industries, 50% of blockchains are used for payment processes.

“In logistics, it may be that they want to use the platform to track the flow and movement of goods, which requires additional technologies like RFID,” he said. “RFID bridges the gap between the digital and physical space, but it can still be manipulated. It undoubtedly minimises the chances of this, but there is still that potential.”