Last Friday afternoon, Stifel Financial Corp.’s John Larkin hosted a conference call with Blockchain in Trucking Alliance (BiTA) Founder Craig Fuller, President Chris Burruss and 228 industry participants to discuss how BiTA will work as a forum to create standard protocols and procedures for supply chain participants as the industry shifts to blockchain over the next 3-5 years. A recording of the conference call be downloaded here. On Sunday, Stifel issued a report outlining its key conclusions from the conversation.
BiTA has seen widespread interest from industry players who are keen to hedge against the risks of under-investing in the new technology and being left behind or, alternatively, over-investing and burning cash in the pursuit of a product that might never become commercially viable. Over 260 companies, including 6 of the 10 largest 3PLs, have already applied to join the Alliance.
During Friday’s conference call, Fuller and Burruss fielded questions about the advantages of a blockchain-enabled supply chain and inquiries about specific token-based and token-less products. The conversation positioned BiTA as a neutral clearinghouse of information and resources that will help industry participants—whether they are small carriers with weak IT infrastructure or tech startups actively developing blockchain-based logistics solutions—develop a mutually beneficial consensus on how to implement blockchain technology.
Larkin’s report summed up blockchain’s relevance to the trucking industry this way: “In simple terms, blockchain technology involves the establishment of a public or private shared accounting ledger, which enables approved participants, across the supply chain, to transact business based on pre-programmed logic that encompasses security measures and contract terms. The theory is that the blockchain enabled supply chain participants will be able to handle transactions, more quickly, more securely, with fewer errors and less labor cost involved in the overall process. Disputes can be automatically arbitrated and, upon satisfaction of smart contract conditions, cash can flow from one party to another however quickly supply chain participants agree that it should.”
In their conversation, Fuller and Burruss elaborated on the stubborn, as yet unresolved problems in the freight and trucking industry and why blockchain could be the killer app that it’s been waiting for. Larkin sketched the future landscape of blockchain-powered logistics solutions: “Payments and cash settlements can be handled quickly, efficiently, and without an intermediary, at much lower cost. Big data collected from things (i.e., tractors, trailers, ELD’s, odometers, warranty work, vehicle servicing, etc.) can all be captured in an unalterable format for posterity. EDI or API communications can be handled without an intermediate clearinghouse.
Smart contracts will be a central application of blockchain technology to the freight industry: proof of delivery can be electronically recorded; a shipment’s chain of custody will be recorded and distributed in real time as it moves through the supply chain; and contracts can be executed and disputes can be resolved automatically, saving carriers, brokers, receivers, and shippers time, capital, and expense.
Imagining a blockchain-driven trucking logistics industry also means imagining how that industry would change, and which players would benefit or be put at a disadvantage by the forthcoming technological revolution. The ‘winners’ are widely distributed across supply chain participants, including end customers who receive their freight more quickly and more precisely, highly-automated 3PLs and 4PLs who are in strong positions to use blockchain to automate their accounting, software providers, trailer and chassis leasing companies, and Tier-1 suppliers.
Other groups in the freight and logistics space will be, in Larkin’s wonderful euphemism, “disintermediated.” Supply chain participants who could see their roles automated and eliminated in a blockchain-powered freight industry include receivables factoring companies, voice brokers, and any “shippers, carriers, brokers, and receivers that choose not to comply with BiTA’s industry standard protocols or that choose not to be transparent.”
In the conclusion to the Stifel report, Larkin describes the synergy between simultaneous technical advances that he envisions for the trucking industry: “Blockchain will combine with the truckload pricing futures market, with data analytics assisted/artificial intelligence assisted real-time matching of loads and empties (at a non-negotiated but mutually accepted price), and with API enabled real time data interchange to consolidate the bulk of the truck brokerage and 3PL community around a handful of tech savvy, well capitalized, large scale companies.”
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.