Rightly or wrongly, the transportation industry has a reputation for being slow to adopt new technology. American trucking in particular is highly fragmented, leading to wide differentiation in access to computing hardware, software licenses, and data professionals. Even large, well-capitalized carriers have trouble operationalizing their data due to cultural issues and incumbent executives relying on instinct.
Trucking’s reputation has made industry insiders skeptical of how the the sector will adapt to one of the most cutting edge, new technologies with the potential to fundamentally transform transportation and logistics: blockchain. How can tech companies developing blockchain solutions drive adoption of a technology that many people still don’t understand and have misconceptions about?
There are at least two solutions to the (perceived) problem of blockchain adoption. The simplest way to get people on the blockchain will, unfortunately, probably take some time to execute: bring the software applications that shippers, carriers, and brokers are already using onto the blockchain invisibly. Just like most people who send email have no idea whether the protocol their client is using is POP3 or IMAP, a carrier accepting a load from a shipper’s EDI does not have to know the details of the cryptographic ledger recording the attributes of the shipment. Once blockchain emerges from its infancy and is implemented by large software incumbents, users will reap the benefits of being on the blockchain without having to be aware of it.
In the meantime, though, blockchain startups are still reaching for market share and trying to attract users. Fr8 Network, in particular, has found a way to leverage its protocol’s tokenized economy to drive adoption: issuing micropayments in the Fr8 token to supply chain participants who upload data to the blockchain.
“If P&G wants to link its TMS to the Fr8 Protocol, the fee for linking a new shipment contract will be directly tied to the amount of data gathering they want to incentivize,” according to Fr8 Network’s white paper. “For example, a truck driver receives a micropayment for using an electronic bill of lading instead of the traditional one, or an IoT provider receives micropayments for the temperature and location updates they provide. Updates every 10 minutes would amount to more micropayments than updates every 4 hours.”
But there’s more than one way to incentivize the use of the Fr8 Protocol. Another angle was inspired by the airports’ special CLEAR lanes, which allow passengers to skip to the front of security lines because their travel documents and identities are pre-verified. By managing those documents on a blockchain, where ownership can be cryptographically secured, cross-border freight traffic could be expedited and wait times nearly eliminated.
“A carrier’s time is a precious commodity within the regulated logistics space as they can only drive so many hours in a 24-hour period before mandatory rest,” Fr8 Network pointed out. “Waiting in line for inspections or clearances creates inefficiency and increases the cost of transportation and trade. Currently, goods entering the US at a land border crossing suffer wait times on average of 2.75 hours for inspection. Through a simple application, the Fr8 Protocol can expedite processes for inspection, clearance, and land border crossing by leveraging the attributes of blockchain-enabled transparency, immutability, and digital identity.”
Although the implementation of blockchain-powered smart contracts is expected to greatly reduce disputes arising from missing and incomplete paperwork, there still have to be conflict resolution and governance procedures built into the Fr8 Protocol. The arbitrators will also be directly compensated with Fr8 tokens, further incentivizing participation in the network.
The tokenized economics of the blockchain have the potential to change industry participants’ calculus when it comes to new software and technology adoption. Many transportation companies are hampered by decade-old systems built for a previous generation of information technology, but are discouraged from switching to newer software because of the prohibitive costs associated with maintaining operations in the middle of an upgrade, importing old data into a new system, and quickly re-training employees. With the Fr8 Protocol, adoption will be a revenue generator instead of a cost center, potentially accelerating the technology adoption cycle and moving transportation into the future faster than anyone would have expected.
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