Enhanced Transparency and Security in the Logistics Industry with Blockchain Technology

Having garnered attention as the technology underpinning virtual currencies, blockchain is now revealing an extended set of possibilities beyond the financial realm.

What is Blockchain?

But what is blockchain? The technology adopts a distributed processing structure in which data is shared throughout the entire network rather than saved on a specific server. The name “blockchain” comes from the way that data is recorded in units called blocks, which are strung together like the links in a chain. Any attempt to tamper with the data in individual blocks requires the entire body of data to be rewritten. This mechanism guarantees the legitimacy of blockchain data, which is said to be effectively impossible to corrupt.

The fact that blockchain data is shared among network participants means that information is easily traceable, a highly beneficial characteristic that allows for the advancement of smart contracts and the effective recording and management of transactions[2].

The financial industry was the first to introduce blockchain. Under the leadership of R3, the US company that developed blockchain technology, nine financial organizations founded the R3 Consortium in September 2015. The consortium’s member organizations now number more than 100[3].

Making use of blockchain technology in the logistics industry

In the field of logistics, blockchain has applications for tracking as it leaves records of data that are almost impossible to falsify. Blockchain can allow a package to be tracked through every stage of the supply chain[4], from the moment it is shipped to the moment it reaches the consumer. Retailers would gain the ability to monitor the condition of merchandise before its arrival on shelves, thus assuring product quality and peace of mind for consumers. Easy access to saved transaction information would make for secure payment and settlement processes[5], and provide sufficient data that would help in determining rates[6].

The information that can be added to a blockchain is not limited to package conditions. Other information could include photo IDs for delivery personnel and procedures for pick-up and delivery, which would strengthen security and reduce the chance of theft[7].

Better visibility of performance would lead to greater supply-chain efficiency, both by departments in charge of various logistical processes and partner companies[8]. Blockchain also makes it easier to identify redundancies and other issues in intermediate distribution. Furthermore, improved monitoring of fluctuations in demand and transportation volume should give rise to new ideas to do business.

As the logistics industry embraces blockchain technology, FedEx has put focus on identifying innovative ways to provide the visibility required by customers up and down the supply chain. Blockchain is enabling that by improving package visibility even before entering and after exiting the FedEx system. FedEx handles millions of records each day, and our experiences have led us to think of blockchain as a secure chain of custody that could transform the logistics industry. With such goals in mind, FedEx is engaged in extensive trials with the goal of achieving greater transparency throughout the supply chain.

Innovation has always been a part of the FedEx DNA. In 2003, FedEx partnered with the University of Memphis, located near FedEx headquarters in Memphis, Tennessee, USA, to establish the FedEx Institute of Technology (FIT). Working with the university, FedEx conducts leading-edge research in 12 fields, including AI, automated systems, cyber-security, and of course blockchain[9].

While blockchain technology is still in its relative infancy, leveraging the technology effectively within the logistics industry will require cooperation with a range of organizations and businesses. FedEx aspires to play a leading role in the advancement of this promising technology.

[1]Gartner Identifies the Top 10 Strategic Technology Trends for 2018”, Gartner, October 2017
[2]2015 report on infrastructure involved in the shift to an information and service economy in Japan (investigation of domestic and overseas developments in services using blockchain technology), Nomura Research Institute, Ltd., March 2016
[3]Bitcoin and Blockchain,” Kharif and Leising, Bloomberg、Bloomberg, January, 2018
[4] 2015 report on infrastructure involved in the shift to an information and service economy in Japan (investigation of domestic and overseas developments in services using blockchain technology),Nomura Research Institute, Ltd., March 2016
[5] “The Blockchain Revolution in Transport: 10% of global GDP will be stored on blockchain by 2025-Deloitte”, BiTA, April 2018
[6] “The Blockchain Revolution in Transport: 10% of global GDP will be stored on blockchain by 2025-Deloitte”, BiTA, April 2018
[7] “The Blockchain Revolution in Transport: 10% of global GDP will be stored on blockchain by 2025-Deloitte”, BiTA, April 2018
[8] “The Blockchain Revolution in Transport: 10% of global GDP will be stored on blockchain by 2025-Deloitte”, BiTA, April 2018
[9]Research at the FedEx Institute of Technology”, The University of Memphis, April 2018

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