Blockchain in logistics

The emergence of blockchain technology happened just at the right time when every industry was searching for a reliable alternative to traditional methods of transactions. While the technology assists every industry, blockchain in logistics and supply chain is causing no less than revolution.

Analysts believe that blockchain in logistics and shipping is well ahead of testing and prototyping phase. The successful operations and development of regulatory framework are indications that Blockchain holds the future of this industry.

This article revises the core concepts of blockchain before sharing its impact on logistics industry. Three case studies are also included later in the text.

What is Blockchain?

Blockchain technology emerged in 2009 in the wake of growing data security threats during transactions. This technology allows users to utilize a distributed approach to information storage instead of traditional centralized one.

In essence, blockchain is a database in which there is no centralized monitoring authority. Instead, there are blocks of information, and each block carries varying size of data of previous block in fixed-sized bit string. Apart from this hashing information, the block also contains transaction data and timestamp.

Blockchain presents a specific instance of distributed ledger which is a collection of algorithms for distributed approach to data storage.

“Blockchain presents the biggest opportunity set we can think of over the next decade.” (Robert Greifeld)

The fact that makes data secured is the design of blockchain which disallows copying or modification of data. Instead of anyone validating the transaction blocks – as in the case of traditional databases, end nodes are responsible for validation.

Apart from data security, blockchain is also highly fault-tolerant because it is highly unlikely that each of the nodes breaks down.

The roots of blockchain lie in the world of cryptocurrencies. First ever recorded commercialized use of blockchain was Bitcoin – one of the top virtual currencies. For over a decade, blockchain technology is proving to be a trustworthy and seamless source of transaction.

Impact of Blockchain on logistics

In recent years, blockchain has set its foot in several other domains apart from its origin of cryptocurrencies. Logistics is one of the primary stakeholders of blockchain because it addresses a number of industrial challenges.

Drawbacks of Traditional Supply Chain Management

There are dozens of stakeholders involved in the journey of products between manufacturers and retailers. From custom and insurance agents to end users, there is a wide array of people interacting with freight.

Every shipment undergoes multiple checks at various intersections. Every group or individual responsible for performing these security checks has to ensure that the previous transactions are clear. Consequently, the time required to transport one freight unit multiplies by the factor of delays caused at each stop.

One can eliminate these problems by addressing their root factor – trust deficit.

World Economic Forum forecasts a supply chain GDP increase of 5% if leaders are able to remove blockers. Besides, they also predict a 15% increase in global trade.

Significance of Blockchain in Logistics Industry

Transportation industry presents the most ideal scenarios for blockchain implementation. Although IoT approach also enables companies to keep track of data, yet blockchain brings far more transparency and minor latency.

One study indicates that transportation at various levels accounts for over 12% of global cash flows. While this percentage means a massive market potential, the verification of payments at every level excessively increases operational duration.

Using blockchain in logistics and transportation eliminates this problem by introducing smart contracts. This contract ensures payment as soon as a task completes in supply chain operations.

Blockchain equally treats every individual in the chain of stakeholders by providing a transparent transaction system. There is no hierarchy defining authority to modify the information. Instead, one mutual mechanism connects people and gives them a reason to trust despite being strangers to each other.

In essence, blockchain creates remarkable transparency by bringing down the probability of document forgery to almost zero.

Case Studies for Blockchain Technology in Logistics

The use of blockchain in supply chain logistics is not a hypothetical anymore. Some of the logistics giants have started using this technology now, and their feedback is notable.


The leading container ship operator is also pioneering the blockchain technology with IBM. As per reported by Forbes in August last year, the alliance reached 92 participants. Moreover, this initiative resulted in 154 million shipping events with a daily increase of one million events on average.

The official report from Maersk reports that the customs authorities in five different continents are among the participants. Besides, port terminals and airlines are also joining this initiative by shipping prodigy. The statistics also reveal that Maersk was able to reduce shipping time by 40% besides minimizing costs.


In a separate partnership, IBM is also powering Walmart with blockchain technology to enhance supply chain management. Few months back, Walmart made it essential for the suppliers to upload transactional and operational data to blockchain.

The need for blockchain at Walmart emerged after a disease outbreak originated from lettuce. The investigators took months to determine the origin. Thus, the company decided to take the leverage of technology.

Using blockchain, the company can track the origin of every supply unit as well as the subsequent nodes which interacted with this unit.

Walmart leadership reports that this tracking took over seven days before blockchain which reduced the time to only 2.2 seconds.


This is a collaboration of banks to introduce automated payments for transportation of goods by land, sea, and air routes. Currently, a total of five banks are participating as yet. The transacting groups and individuals can track every step during the entire operation between shipment departure and delivery.

The parties including inspectors, logistics operators, banks, insurance agents, manufacturers, and buyers will no longer rely on traditional paperwork.

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