EYE ON LOGISTICS BLOG

Can Blockchain Reduce Shipping Costs for Truck Parts Manufacturers?

Jessica Eynon

09 January 2019

With advances in blockchain technology, reduced shipping costs are predicted across numerous industries.

We are just beginning to explore the potential for blockchain and the freight shipping industry, particularly with respect to truck parts shipping. We’ve written before about the potential impact blockchain could have on the shipping industry. We are now seeing evidence of the power this new technology has to streamline business processes — and how blockchain can reduce shipping costs for truck parts and other heavy-equipment manufacturers. 

A recent international consortium explored how blockchain might streamline certain processes, from the automotive industry to beer distribution. The consortium represents typical stakeholders in international shipment. They collaborated to test 12 real-world shipments. Each shipment had a different destination and different regulatory requirements.  

The result? These test cases confirmed that blockchain technology does, in fact, reduce shipping costs and increase supply chain visibility. 

Blockchain basics  

Let’s break down how blockchain works and its potential impact to truck parts shipping.  

First, a recap of the basics: blockchain operates as an electronic database and ledger that securely stores records of values and transactions in an unalterable database. Blockchain automatically captures every part of a transaction in a digital record.  

By tracking, verifying, and storing all aspects of a transaction, blockchain eliminates the delays and “middle men” that plague complex transactions. For example, international shipments of automotive parts typically require more than 20 different paper-based documents. This approach limits data quality, real-time visibility, and data transfer. Timely payment may also suffer delays with the traditional paper-based approach.  

Blockchain and shipping your truck parts 

So, how would blockchain affect transactions for your truck parts? Evaluating your mode options and streamlining the process of claims are the areas where we see the biggest impacts for blockchain and shipping truck parts.  

With this information stored as part of a transaction, you can access more information than ever as part of a blockchain transaction.

Evaluating modes with blockchain  

Blockchain operates as a secure database that can store historical information on payment. Open access to this information will allow shippers to evaluate rates with insight into historical transactions. Transparency comes in the form of easily accessible data.  

Blockchain streamlines data transfers. Adding in data from Internet of Things (IoT) devices tailored to shipping, like electronic logging devices (ELDs), could offer additional insight into carrier performance. With this information stored as part of a transaction, you can access more information than ever as part of a blockchain transaction. When choosing your mode or between carriers in a mode, this information may provide a critical edge.  

Participants in blockchain would also have access to real-time advantages, like streaming capacity information. With up-to-the-minute data on capacity, blockchain users could react to shifting options in real time. This would improve your ability to find capacity and save costs on your truck parts shipping.  

Streamlining claims with blockchain  

With an estimated $140 billion tied up in claims at any give time, there’s clearly a lot at stake in streamlining shipping claims. Claims are an unfortunate fixture of truck parts shipping. Time, money, efficiency: these are all at stake when claims linger. With the elimination of the standard claims paper shuffling, the calls — and the hassles of trading claims information — blockchain could revolutionize how we handle claims when shipping truck parts. 

How, exactly, would this work? Blockchain simplifies contracts by handling transactions according to the terms of the contract. With the contract executed and the transaction cleared simultaneously, blockchain eliminates the standard back-and-forth of live parties bickering over an agreement.  

The transparency of blockchain is a boon here, too. With the facts of the transaction viewable by all parties, disputes are less likely. With blockchain transparency and built-in arbitration, contract squabbles may no longer eat up time and associated costs, improving your overall shipping costs.   

Get ready for blockchain — Reduce shipping costs in your operation  

Your company likely sees the advantages of riding the wave of IoT and other transportation technology. Jumping into learning about the details, however, may seem daunting. We are working with groups like Blockchain in Transport Alliance to stay on top of this new technology and to stay aware of how blockchain advances in shipping could lower your costs and improve your customer service.  

Check back here for more insights and updates from Evans on how blockchain could reduce shipping costs going forward in 2019.  

Jessica Eynon

Jessica is the VP of Technology Solutions at Evans Transportation.

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