BiTA signs up members, aims to lead in transformative technology
An industry that has a reputation of being behind the curve on technology may be at the forefront of one of the most important technological developments in decades. Yes, the trucking industry is poised to lead the blockchain way.
Why? One of the reasons is that blockchain and the accounting system it utilizes - triple entry accounting - sets up perfectly to solve so many of the issues that plague the industry. Blockchain implementation could result in double brokering becoming a thing of the past; drivers can be paid immediately upon delivery; maintenance records become transparent and verifiable; payment for things like fuel, lumpers, and parts are all immediate and self-executing; freight quality and claims can be easy to dispute and arbitrage; and carrier history and safety can be recorded for infinity.
There are plenty of other possibilities as well. Say goodbye to document imaging and hello to confirmation sheets becoming self-executing. Track and trace clerks would no longer be needed to manage exceptions and there would be no need for EDIs or APIs for load tendering. Freight bids can be binding and firm; fuel advances or surcharges self-executing; and short-term or gray asset leases are possible. As truck platoons become mainstream, the issue over payments will rear its head, but with blockchain, it can be automatically settled. Trailer pools can be easily tracked and assets can be exchanged between carriers; insurance contracts can be transactional based; and even contract attorneys are at risk in the whole blockchain economy.
The one difficulty to blockchain, as it applies to trucking, is that you have a physical transaction - i.e., a load being delivered - and this transfer has to be recorded in a digital format. The evolution of blockchain must bridge the gap between analog and physical transactions to digital transactions and the blockchain. To facilitate this, a group of companies are discussing standards and ways to deal with turning physical/analog transactions in the trucking industry into blockchain-capable transactions. They call themselves Blockchain in Trucking Alliance (BiTA) and they have been busy signing up members to the cause since launch earlier this month. McLeod Software, 10-4 Systems, Triumph Business Capital, TransRisk, P&S Transportation, U.S. Xpress, and Convoy are among the companies involved.
Craig Fuller, co-founder of BiTA and CEO of TransRisk, explains.
“Blockchain by its nature is distributed and owned by no single person. It is open source and requires collaboration and standards. We are helping to launch BiTA as a way to initiate dialogue between parties in the trucking ecosystem,” says Fuller. “We have relationships with many of the Alliance members that are not related to blockchain, but the conversation around blockchain keeps coming up and many of them are exploring blockchain, but most are concerned about making significant investments because of the lack of standards and commercial adoption.”
What is the blockchain? According to the Institute for the Future, “A blockchain is an online database that stores information across a network of personal computers, making it not just decentralized, but distributed. This means no central company or person owns the database, yet everyone in the network can use and help run it, but not tamper with it.”
BiTA explains its mission as the creation of “a forum for promotion, education, and the encouragement to develop and adopt blockchain application standards in the trucking, transportation, and logistics industries.”
“We are engaging the brightest minds from the most influential leaders in transportation, finance, and technology,” the organization states on its website. “BiTA will build the first set of transportation industry-specific blockchain standards and promote the most transformative technology since the internet.”
The group notes that it will develop standards that “are intended to create a common framework in order to assist members and industry participants with their organization’s decision to develop and adopt blockchain technology.”
BiTA believes that blockchain will allow for greater clarity, transparency and trust within the supply chain, but notes that without a common set of standards, those will be lacking among entities.
“We believe the freight transportation industry is quickly evolving from merely moving goods from Point A to Point B toward an arms race of technology and data with many players involved, both old and new. We see blockchain as being one of the key, transformative technologies on the horizon along with autonomous trucks, crowdsourced digital 3PL platforms and 3D printing,” Ravi Shanker, Executive Director of Research at Morgan Stanley states.
Brigid McDermott, vice president of Blockchain Business Development for IBM, believes the industry is ripe for change. “The potential here is phenomenal,” she told FreightWaves earlier this year. “The match between what blockchain offers and the industry pain points is incredible.”
McDermott says that the key to blockchain is trust. “Blockchain is all about trust and what blockchain gives you is a digital record in the supply chain ecosystem,” she says, adding that she sees three main transformation areas of the supply chain because of blockchain technology: visibility, process optimization, and demand management.
BiTA has identified several areas which early blockchain applications could be focused. These are:
- Digital Assets
- Smart Contracts
BiTA goes on to explain how each of these areas could benefit from the use of blockchain. For instance, when it comes to payments, blockchain “transactions can be made at any time and can be completed within seconds. Payments can be tied to smart contracts,” the group says.
“Working capital is the most costly and data intensive style of commercial finance. The key to providing liquidity for accounts receivable and inventory is all about moving up, or down, the supply chain in order to validate the authenticity and validity of the collateral,” notes Steven Hausman, President and CEO of Triumph. “We’ve been chasing various forms of peer-to-peer data exchange for 15 years, but the available exchange models are clunky. Now, we don’t claim to know what a transportation blockchain looks like, but we’ll know it when we see it. And once we see it, the world of conventional liquidity financing will become immediately obsolete.”
Blockchain also allows for records (sometimes called blocks or nodes) to travel unchanged through the chain, providing “immutable record of ownership of cargo and assets.” Potential benefits extend to maintenance records, trailer pools, trailer leasing, tires and more, BiTA explains.
One of the primary benefits of blockchain in any industry is the ability to provide verifiable proof of the parties involved in the transaction. This can be particularly important in the supply chain, where shippers, brokers and carriers are often unknown to each and where trust is critical.
“Blockchain identity management projects are addressing the challenges of establishing provenance, authentication, and reconciliation,” BiTA says. “These solutions can be developed so that the transportation industry can reduce fraud and outsource specific regulatory obligations cost effectively.”
Data can be held in the chain, providing easy access to information such as geolocation, timestamps, telematic data and communications between parties. Each step of the way, that information is locked into the blockchain so there can be no disputes as to when a transaction occurred, or whether a truck arrived, etc.
Finally, according to BiTA, blockchain enables the execution of “smart contracts,” which allow for automatic execution of terms once certain parameters are achieved. For instance, a carrier can be paid immediately upon delivery of a shipment with funds transferred automatically, as soon as the customer signs the acknowledgement of delivery.
“Successful standards are developed through consensus of the interested parties. P&S sees the potential blockchain technology can bring to logistics. BiTA is a great opportunity to actively participate and learn of the uses of blockchain in our industry,” Mauricio Paredes, VP-Business Technology, for P&S Transportation, states.
BiTA does not have a direct commercial interest. It is involved in developing standards and open dialogue around blockchain applications and any company that is in the trucking and logistics space that wants to participate in the dialogue is encouraged to join. Membership is open to software vendors, payment companies, data companies, shippers, brokers, carriers, consultants, and anyone with a vested interest in the outcome of this revolutionary technology.
“We recognize that many of the companies that participate will be competitive with one another and that is encouraged,” Fuller says. “In order for there to be standards in technology, companies with counter interests should be discussing open standards between each other for the multitude of applications across the industry.
“As companies go out to develop their individual commercial blockchain applications, we want to ensure common standards are adopted,” Fuller adds. “We hope that everyone involved in blockchain around trucking will come and share ideas and dialogue and help to develop standards.
“When the VCR was invented, there were two standards - one developed by Sony was known as Betamax and one that was owned by an alliance of companies became known as VHS,” Fuller continues. “Sony’s technology was better, but lost to VHS because there was a consortium of companies that supported VHS and not a single entity. Many of these companies competed, but VHS won because it was a collaborative process and not owned by a single player.”
BiTA is currently accepting members. Those wishing to join must fill out an application on the website. The application can be found at https://bita.studio/ or one can be requested by emailing email@example.com. Once submitted, the application will be reviewed by the organization’s membership committee.