Site icon iThink Logistics | Blogs

How Is Blockchain Impacting The Logistics Industry?

How will Blockchain Technology Impact the Logistics Industry?

$50 Billion. 

It is indeed a humongous amount, even for an entire economic sector. 

But you know what, this figure amounts not for an entire sector but only the reported losses incurred by the logistics industry in a year owing to factors including mislabeled, mis-shipped, and stolen cargo. 

It looks like the loss would ring some bells to wake the hotshots in the e-commerce logistics sector, who refuse to change, citing issues with human resources. 

But fortunately, you now have a solution, and it is a good one.

Through a public ledger system that tracks the movements of every shipping container, blockchain technology can help increase the efficiency of your logistics organizations. 

The entire system can build speedier delivery routes, eliminate pointless steps, and reduce bottlenecks and human error.

So, before understanding the impact of blockchain on the logistics industry, you must understand the technology itself. 

What is Blockchain Technology?

Let’s go back in time. 

We humans have looked at databases in different lights at different points in history.

In the earlier days, humans stored and processed data manually using pen and paper.

However, as the population grew,  pen and paper were replaced by computers.

But you see, computers were not yet too advanced to decode the human mind. They were still prone to mistakes, confusion, and most importantly — corruption.

Cut to today; blockchain technology is filling that gap. 

It didn’t just change how we look at payments and transactions but offered various applications in diverse sectors, including logistics and transportation.

Ah, it’s not magic, but pure logic.

To understand more, let’s break down the technical definition:


“Blockchain is a decentralized, distributed, immutable peer-to-peer ledger that encrypts and stores transaction records and is (generally) accessible to the parties involved.”


Basically, information is stored in a block, and as transactions happen, newer blocks are added to form a chain. Hence the term “blockchain.”

To make it even easier, let’s look at it as a simple accounting book:

You have space to inculcate ten transactions on page 1 (Block 1) in the book.

Once the first ten transactions are written down, the eleventh transaction will be penned down on page 2 (Block 2).

The collection of all these pages (Blocks) would thereafter create an accounts book, i.e., Blockchain.

Interestingly, if you try and edit any transaction on any of the pages, all the previous pages will be edited by default.

And this is exactly why the Blockchain system is fool-proof and corruption resistant.

Now let’s get a bit deeper into how it impacts the logistics industry.

5 major challenges in the logistics industry

The logistics sector is expected to surpass $12 billion by 2027. Even so, shipping companies are losing out on significant profits due to major challenges. 

1. Manual contracts, transactions, and data updates

With the participation of multiple stakeholders, manual contracts are a norm in the logistics industry. This means more paperwork, more risk of human error, and presence of stakeholders, demanding both time and money.

2. Counterfeiting 

Fraudulent actions like compromising the quality of products, illegally adding more products in shipping, mislabelling, etc., can cause significant issues in the supply chain. It diminishes trust and sometimes poses legal challenges for businesses.

3. Non-inclusive information systems 

67.4% of supply chain managers use Excel sheets as a management tool. The logistics industry has numerous external vendors, and there is still no standard, inclusive procedures to manage end-to-end processes.

4. Compromised information sharing and data visibility

Manual logistics processes lead to a lack of communication while sharing information and data. This, in turn, compromises authenticity and reliability. 

5. Forecasting customer demands and change

Only 22% of companies have a proactive supply chain network that addresses and adapts to changing customer demands. Such delays result in a negative customer experience.

These challenges affect product quality, warehouse management, and customer experience. 

Fortunately, blockchain technology is revolutionizing the way logistics and supply chain businesses function.

7 ways Blockchain will transform the logistics industry

As real-time applications of blockchain increase, the logistics industry is imbibing it to overcome significant issues. Here’s how it’s helping:

1. Inculcates transparency and traceability in every process

Every supply chain has several components which make tracking and updating difficult. 

Since blockchain technology is inclusive, every component and business can access it, making real-time tracking, invoice clearance, and quality checks more efficient. 

Hence companies like Walmart, Amazon, and Paypal rely on it for transparency in global organizational functions. 

2. Enables a secure, seamless information flow

Whenever a block in a blockchain is manipulated, the entire encrypted chain changes. Hence, hackers will need to manipulate every record, which makes it impenetrable. 

“Anything that can be conceived of as a supply chain, blockchain can vastly improve its efficiency – it doesn’t matter if it’s people, numbers, data, or money.” – Ginni Rometty, CEO, IBM.

3. Improves responsiveness, flexibility, and forecasting

With its effective data analysis clear, blockchain makes it easier to adapt to customer demands. 

And Origintrail does the same.

It tracks its food supply chain with two laboratories that conduct forensic and chemical tests on products. This data helps them enhance their food quality and safety, exceeding their customers’ demands.

4. Improves financial performance

Supply chain disruptions can cause a 62% loss in finances. This can result from several people, miscommunication, and a lack of structure. 

Since blockchain technology empowers businesses to track their shipments without third-party involvement, it automatically cuts costs and improves financial performance. 

5. Sets standardized processes for global-level organizations

Cross-border transactions still take time since banks don’t have standardized procedures.

Since blockchain in logistics has standardized procedures, it makes transactions easier and quicker. 

Unilever used GreenToken by SAP, a blockchain-enabled solution, to ensure that their palm oil comes from sustainable sources.

This helps Unilever track the source of palm oil and build a positive global brand personality.

6. Instills sustainability

Eight global supply chains are responsible for more than 50% of annual greenhouse gas emissions.

With data, blockchain in logistics gives you an overview of resources used in packaging, producing, and shipping goods and services.

Multiple companies are now assessing the impact of their supply chain and moving to environment-friendly resources. 

7. Reduces the risk of human error and losing information

Blockchain offers a digital platform to track, record, and store information. It leaves no room for manual errors, corruption, or human judgment. 

Since data has the upper hand, there is less need for verification and checking the validity of the information. 

Final Words

Blockchain technology is proving to pioneer logistics and supply chain management. It focuses on the pivotal aspects of global businesses; efficiency and customer satisfaction. 

It’s not just a technology to streamline processes but also to:

So, what problem does your company aim to solve with blockchain technology?

Exit mobile version