The global logistics market is predicted to reach US 15.5 trillion in 2023. The world runs on trade and traditionally the industry has been plagued by inefficient processes, middlemen, and archaic technology. As a result, venture capital has poured into logistics startups over the last few years in an attempt to digitize the supply chain.
Even with large sums of money thrown at start-ups over the last few years, the logistics business is still a tough nut to crack. Blockchain, an introduction can be found here, is the latest technology that has a chance to cause massive disruption throughout the entire global trade ecosystem. The inherent nature of blockchains - decentralized, immutable distributed ledgers, and not reliant on intermediaries - are perfect for supply chains. Currently there are countless intermediaries and modern global supply chains are so complex that is that it is becoming increasingly difficult to ensure the quality and authenticity of goods in the supply chain.
Blockchain startups have the potential to dis-intermediate the logistics industry and provide full transparency into products, services, costs, and transactions. Here are a few blockchain startups in logistics that could cause massive disruption in the industry:
Shipchain is a U.S. based startup with some ambitious plans to solve several key pain points in global trade - unified end-to-end track and trace across carriers, a decentralized freight brokerage platform to match shippers and carriers, and an incentivization platform to encourage good stewardship by rewarding operators for delivering on time, or by taking the most energy efficient route, safe driving etc. This incentivization scheme is an interesting idea as the trucking industry faces a massive and growing driver shortage. ShipChain is currently piloting their platform with Perdue Farms, a major poultry producer in the U.S.A, where Perdue will get improved visibility of where any product is throughout the supply chain and improve communication with carriers.
FreshTurf based in Singapore, is building a blockchain to manage last mile delivery transactions between retailers, logistics companies, and consumers. Singapore has a nationwide government network of delivery lockers where consumers can pick up their packages ordered online. FreshTurf’s platform allows any merchant or logistics company to securely assign a digital identity a package and secure space in a digital locker close to the consumer. The solution enables convenience for online shoppers, better utilization of parcel lockers as any retailer or logistics provider can participate, and reduces the need for logistics providers to invest in costly last mile delivery infrastructure.
OriginTrail founded in 2014 and based in Slovenia provides enhanced traceability of food supply chains from seed to stomach. Currently, supply chain data is fragmented and spread across many parties which makes traceability very difficult beyond one step backwards or forwards at any point in the supply chain. Improper tracking of food can lead to disease, illness, or worse which are obviously bad for consumers but also extremely damaging to a brand’s reputation. Just ask Chipotle! OriginTrail is attempting to solve this very real problem by harnessing blockchain technology to provide detailed, real time information about products as they move through the supply chain. Blockchain technology will allow all of the entities involved (raw materials, producer, logistics provider, warehouse, retailer etc.) to exchange relevant data in a secure way, protect their brands, and reduce inefficiencies.
CargoX founded in 2015 and based in Slovenia is building a digital blockchain-based smart bill of lading that can be encrypted and securely recorded on the blockchain. Paper bills of lading are still the norm for sea-freight shipments and create a whole host of process inefficiencies and additional costs. CargoX estimates that courier costs alone for paper bills of lading account for $5 billion in supply chain costs. The digitized smart bill of lading could be issued instantly by the exporter and transferred instantly to the legal owner of the goods as specific conditions are met without the need for couriers or paper-based processes in the middle.
These are some of the innovative blockchain startups trying to solve real-world supply chain and logistics problems that I’ll be keeping my eye on in 2018. Do you know of any others?
I write about forward-looking topics that are relevant for everyone that will be part of the future logistics industry. You can read more articles here or sign-up for a free, but incredibly infrequent newsletter here.