Blockchain is Coming to Transportation – Here’s How

The transportation industry has long discussed blockchain with a healthy dose of skepticism or has taken a wait-and-see approach to its adoption. But lately, we’ve started seeing more optimism and ideas for blockchain’s use, especially as it emerges as a possible solution to shipment visibility and carrier communications.

The industry has traditionally struggled with visibility, but there have been some significant advances of late. A modern, multi-modal Tier 1 TMS can now take data from all sources, cleanse it and use it. But there still remains a significant gap: The for-hire truck, especially brokerage type non-contract full truckload moves.

Small but mighty

There are more than 500,000 TL carriers in the U.S. with eight trucks or less. Even though most have little-to-no IT support or technology, they dominate a mode of transportation that can’t be ignored. It’s hard to establish a way of tracking them all, even though in today’s e-commerce world many shippers need tracking on everything.  

Many have used cell phone tracking methods that work off the driver’s cell phone network. The driver has to agree to be tracked, and then you can use GPS to ping the phone and assign it to geo-fences and mimic up-status. This type of tracking wasn’t very effective or consistent because you had to get the actual driver’s cell phone number AND get them to agree to be tracked. As a result, most shippers only succeeded with cell-phone ping tracking loads about 30 percent of the time.

Now, we’re hearing that cell phone pinging will soon be disabled by the big telecom providers because of consumer-related concerns around privacy. This article from FreightWaves explains:

The impact of this development is enormous, especially with regard to shippers and third-party logistics providers (3PLs)…the move to eliminate app-less phone tracking would possibly drive the industry to place greater value on data coming from the electronic logging devices (ELDs) – that after the mandate last year, is ubiquitously present across all trucks that travel U.S. roadways.

With the ELD mandate, some companies are plugging into ELD manufacturers and retrieving data off the ELD or the carrier’s system (which gets it from their own ELD devices). This and other types of ELD tracking show promise as more companies offer it, and most now offer a hybrid solution where they use all forms: Carrier API, ELD and cell phone tracking as a last resort. But as I mentioned before, if you’re using load board carriers, your success rates at tracking are not going to be good enough. There are just far too many different carriers to onboard into an API/ELD network for tracking.

Using blockchain to improve visibility

The good news is that with ELD and smartphones, every truck now has a GPS device and a way to communicate. This gives technology providers something to build on. And this is where blockchain could come in.

First, forget about blockchain as you know it. This is not Bitcoin. Think about it as another type of API/EDI – as a different way to communicate securely between partners.

At its heart, a blockchain creates a shared system of records in a business network. In our context, the business network is the TL carriers, their customers and agents. Each member on that network gets access privileges on a need-to-know basis. That way, information can be shared but remain secure. For example, a carrier posts data to the blockchain and allows customers and agents to use the data. This could be used to create a network of transit data to solve visibility needs.

The framework for creating a truly viable transportation visibility blockchain network is within our grasp. And not only for visibility, but for most trading partner communication needs: Quoting, imaging, or payment to name a few. Let’s dream of a world where we don’t rely on email to tender 90 percent of TL freight!

At first, everyone will struggle with communication protocols and data sets (reference numbers and fields being used differently by each carrier and such), but these issues can be overcome with the right technology. The biggest challenge will be the 500,000+ carriers and getting them to do this together. It will be like herding cats. Sure, a simple smartphone app could be all they need to post to the blockchain, but getting everyone to use the same app will be a challenge. We can incentivize load board carriers, like make $50 of the load require tracking, but there are so many different options for TL carriers now. Your average carrier has literally dozens of choices to solve this, which makes it hard to unify.  

BITA (Blockchain in Transport Alliance) is working for common standards, but getting one solution to critical mass will be the biggest challenge. Yet the benefits would be massive, allowing small TLs the ability to offer levels of trading partner interaction that is now only reserved for the large carriers with huge IT budgets.

I am not sure how we will overcome this challenge of herding 500,000 cats, but there are a lot of great minds working on this and technology is always improving. Perhaps it will be a regulatory body, because a strong case can be made that a national network built by a government agency would have a measurable impact on GDP. Or perhaps it will be a non-profit, or even multiple companies that charge out on their own and then consolidate.

As a vendor of a Tier 1 multi-modal TMS system, we want to see a blockchain like this exist. We could tie it into our automation, create workflow around it, and augment the data so that customers could really see what’s going on with orders in a user-friendly control tower view.

Or, perhaps this blockchain will never be built and some other type of technology will come into play. In the end, I just hope my children won’t have to tender TL via phone and email.  

JP Wiggins is Co-Founder & Vice President of Logistics at 3Gtms, where he manages channels and partnerships for the company. He was most recently at SAP where he was the solution principal focusing on SAP’s transportation, warehouse and event management offerings in North America and previously directed industry marketing for the company’s transportation and logistics business unit. Before SAP, he was senior vice president and general manager for Descartes Systems Group’s supply chain, transportation and logistics applications business, and also had been vice president of product management for the company. Previously, JP was co-founder and senior vice president of logistics for Global Logistics Technologies (G-Log); co-founder and vice president of product management at dx/dt; and vice president of logistics at Weseley Software. He holds degrees in transportation & logistics and marketing from The Ohio State University.