As blockchain becomes ubiquitous across consumer and enterprise applications, we will continue to see more and more large scale disruption of traditional sectors that are critical parts of the global economy.
One space ripe for change is the freight and logistics industry, which commands roughly $8 trillion in annual revenues (2015), and is expected to reach a volume of over $15.5 trillion by 2023. The world’s international supply chain is becoming more and more dependent on technology for the enablement of free trade, a core component of democracy and freedom.
And while clearly a massive and critical component of the modern world, the freight industry is still lagging years behind in terms of technological progress and operational productivity. Many of the problems are rooted in the fragmented nature of the industry, where there is little transparency throughout the logistics process, leaving no one player held accountable for many of the expensive liabilities. In fact, the FBI estimates there is over $30 billion in cargo theft per year.
BiTA was formed by “experienced tech and transportation executives to create a forum for the development of blockchain standards and education for the freight industry”. Effectively, they want to bring together the best and brightest minds in the industry, across a wide variety of leading freight, shipping, and logistics companies, that have a vested interest in the development of blockchain technology.
According to BiTa’s website, there are nearly 60 current members with over 300 applications from companies around the world. Recent days saw global giants such as SAP and UPS join, the latter looking to “increase transparency and efficiency among shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders.”
Not all members are traditional industry veterans, some include new blockchain companies with targeted focuses. For example, blockchain-based ShipChain will be building out a decentralized, fully integrated platform to give insight into each and every stage of the shipping process. This blend of traditional companies working with startups to help drive innovation in the industry is a sign of upward progress.
At the core of BiTa is the goal to reduce costs and make shipping more efficient. Currently, buyers and shippers need to hire expensive and often faulty intermediary freight brokers to manage deal flow and verify transactions. Acting as “gatekeepers in the industry,” these brokers can often drive up consumer prices as much as 50% from added fees and commissions.
In an industry that is often considered opaque and complex, there is little to no clarity into how deals really flow, as powerless buyers are sometimes forced to wait weeks, often months, before receiving updates for goods they have purchased. The current infrastructure has made it difficult to scale, another reason why BiTa is on a mission to introduce new blockchain technology.
John Larkin, an industry analyst at Stifel, states that BiTa’s impact and goals are still “years away”, while calling those logistics companies unwilling to comply with the transparency and standards of BiTa “potential losers”. Larkin’s vision for the industry is one where truckload pricing futures will combine with data analytics and artificial intelligence to create real time matching of loads and empties.
BiTa will begin by providing educational resources, open forums, conferences, and supplementary information as to inform those in the industry about the latest happenings across the intersection of freight and blockchain.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:48 PM UTC