Blockchain Applied to Logistics

Anyone who understands the financial market always remembers Satoshi Nakamoto when we talk about blockchain. Satoshi is the pseudonym used by the creator of bitcoin. To this day, no one really knows who Mr. Nakamoto. Everyone agrees, however, that bitcoin changed the way of doing business transactions and opened the way for other cryptocurrencies. This, of course, thanks to blockchain technology. According to IBM, blockchain “is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets across an enterprise network. An asset can be tangible (a house, a car, money, land) or intangible (intellectual property, patents, copyrights and branding)”. We can simplify the definition above using the explanation given by Revista Exame, at Christmas 2021, which described the blockchain as follows: “a network of distributed information records that undergo changes through blocks of transactions protected by cryptography, connected to each other , and which cannot be changed or deleted after their verification”.

That is, the blockchain works as follows: two or more parties digitally build, in chronological and immutable order, blocks of information that are chained together, ensuring transparency in negotiations and multilateral control of the data present there. This is why cryptocurrencies have become so trusted and popular.

But this technology can also be applied to the universe of Logistics. The possibility of sharing immutable information built in successive blocks by the parties involved ensures transparency and real-time monitoring for supply chain operators.

According to entrepreneur Stefan Rehm (who was born in Germany, graduated in Business Administration in the Netherlands, attended Harvard, obtained a master’s degree in Business Management from the HEC School of Management in Paris and in 2012 founded Intelipost in Brazil), “Blockchain brings confidence in the data recorded on the network because there is no company that can handle the data. Once recorded within the Blockchain, this data is accessible by everyone with access. If someone wants to change this value, all participants need to confirm and authorize this change, which is created within the Blockchain. With this, all actions are visible to everyone and this brings a certain guarantee that the data is real. As it is a network that connects several players in a market, everyone connects and this brings many efficiency benefits. Instead of everyone needing to talk to everyone, everyone talks to the network and that goes to the rest of the market. This influences the speed and quality of the data. In Logistics and Supply Chain, we studied about 23 use cases together with IBM and won a Blockchain award from them called IBM Smartcamp. Following this achievement, we worked with several teams within IBM to study how it is possible to apply Blockchain in Logistics. After verifying these 23 items, we held a Hackathon [a meeting of the company with other market agents during a weekend] to think about the application in Logistics. So, we brainstormed to pick the two most relevant cases and programmed a product function to realize these two use cases. The two main cases we identified were shipment tracking and invoice reconciliation. Both cases are the most relevant and realistic to use [Blockchain] in a short time here in Brazil.” The statement was given to Mundo Logística Magazine, one of the best in the country in this segment, in February 2018.

Stefan Rehm also said that any company in the Logistics sector can use this technology and that the advantages are considerable. “In cargo tracking, there is communication between several companies within the chain to produce the tracking data. There is the shipper, who, at the beginning of the process, enters the invoice data for the carrier, who receives this and issues an acknowledgment about this data and passes the load on. In many cases, there is a re-dispatch process in the chain, in which a second carrier receives the package from the first and also issues a CTE [Electronic Bill of Lading] and places it in the hands of a driver who, in the end, makes the delivery until the consignee or company, which needs to confirm receipt of this cargo for everyone in the chain. That is, in this case there are already [about] four companies involved, which need to work with the same data and one depends on the other. Obviously, the loss is in the quality and speed of the data, but Blockchain manages to enter with the clear benefit of the information of this data and thus speed up the process as a whole, reducing the amount of errors and occurrences that happen in the delivery itself. In the second use case [invoice reconciliation], the benefit is to guarantee the security of the information.