Blockchain: How This Emerging Technology Could Transform the Transportation Industry
KSM and KSM Transport Advisors Join Transportation Industry Alliance to Drive Blockchain Standards
There is little doubt that blockchain – the newest buzz word in technology – has the potential to change the way transportation carriers interact and transact with each other. Support of this enterprise solution, which documents transactions that are important to the safe and efficient moving of freight, is gaining traction, and the number of retailers, manufacturers, and carriers embracing blockchain and its benefits is growing.
Increased demand for security and transparency within the supply chain is driving interest in the ability to have a continually updated, unchangeable ledger of economic transactions on a peer-to-peer network. Blockchain still encompasses the various familiar transactions in the supply chain, but it adds a level of protection as each transaction is validated and recorded. No one party on the network can modify or delete any record without consensus from the others. This creates a permanent, digital history as products move from the point of origin to the final mile.
Blockchain’s Impact on the Transportation Industry
The transportation industry has always been a critical link within the supply chain, and it has a significant role to play as blockchain technology advances. The industry could also reap several benefits, including timely status updates, faster freight payments, and improved cargo security. Additionally, the data generated through blockchain technology could drive greater data analysis, which is valuable in today’s data-driven supply chain.
Blockchain can also help transportation providers mitigate risk and could lead to more contract transparency and a more direct transportation process. Early adopters of the technology are seeing benefits from blockchain’s transparency in reducing fraud for high-value goods such as diamonds and pharmaceutical drugs and to improve safety on sensitive shipments, such as food.
Blockchain in Transport Alliance (BiTA)
Any new technology brings challenges, including the need to create industry standards to govern the processes involved.
As the transportation industry shifts to utilizing this emerging technology over the next three- to five-years, the Blockchain in Transport Alliance (BiTA) has been formed to build the first set of transportation industry-specific blockchain standards for supply chain participants.
BiTA and its members, which include some of the country’s largest transportation, logistics, and software providers, will work together to provide definition and direction for the development of blockchain technology in the trucking industry in a manner that will create efficiencies, transparency, and foster trust.
By providing more clarity and standards around blockchain through education and promotion of the technology, BiTA intends to be the leading blockchain voice for the transportation industry. The alliance, which was formed in August 2017, will serve as a neutral clearinghouse of information and resources that will help industry participants develop a mutually beneficial consensus on how to implement blockchain technology.
As the first, and currently only CPA and consulting firm to join BiTA, Katz, Sapper & Miller (KSM) and KSM Transport Advisors (KSM Transport Advisors) will be better prepared to counsel clients on the impact blockchain will have on the supply chain.
BiTA’s mission includes the encouragement of key leaders within the transportation, finance, and technology industries to participate, discuss, create, and adopt industry standard uses of blockchain applications. Key focus areas BiTA plans to address include smart contracts, freight payments, asset maintenance and ownership history, grey trailer pools, and transparency and chain of custody of freight. “One not so obvious byproduct of a blockchain environment is the improvement in data integrity,” says David Roush, president of KSM Transport Advisors. “This will allow more precise calculations regarding the profitability of freight from the carriers’ perspective.”
Many notable transactional technologies that are an integral part of the transportation industry are grounded in commonly accepted standards, including BOLs, EDI, ISO, and Ascii. Blockchain will benefit from having the same set of market standards. BiTA plans to release the first set of transportation-related blockchain standards in 2018.
“Overall, blockchain is expected to drive an evolution within the trucking industry through the efficiencies it creates,” says Tim Almack, partner-in-charge of KSM’s Transportation Services Group. “Blockchain can enable more transparent and accurate end-to-end tracking in the supply chain, and manufacturers and retailers are optimistic about its potential.”
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