How Blockchain Can Alleviate Risks in Logistics

in logistics •  last year 

logistics steemit.jpg

In 2017, the logistics industry’s worth was estimated at as much as $1,171 billion. However, the more it grows, the more risks may ensue. Insolvency, cargo damage, tax evasion, and underinsurance are the risks that can be mitigated with blockchain. Let’s dig deeper to understand how.

Distributed Ledgers

Let’s start with damage and underinsurance risks that can be diminished with distributed ledgers on blockchain.

A distributed ledger is a consensus-based data storage when data is replicated and shared between multiple parties, with no central administrator. This way, if someone wants to add a new record to the blockchain, multiple witness nodes are required to affirm this action. The key advantages of such decentralization are significant cost-cutting and data integrity.

How will distributed ledgers act in case of damage? Imagine that a cargo is shipped from the supplier A to the customer B. The companies C and D are responsible for logistics. So, when C takes the cargo from A, these parties need to confirm the quality of the batch. To add the record about the shipment to the blockchain, the data needs to be affirmed by its witness nodes. So, when some damage is detected at the stage of the cargo shipment from C to D, the system will automatically chalk this up to the C’s account.

How will distributed ledgers prevent underinsurance? To insure the cargo, the insurer will get the confirmation of the cargo value from the witness nodes. This way, there is no chance to underestimate the value because the nodes are decentralized and highly reliable.

Smart Contracts

Let’s look at the potential role of smart contracts in the logistics industry.

First, they can diminish the insolvency risk. Once the supplier A and the customer B agree about their cooperation, smart contracts check up B’s balance to ensure A in B’s solvency. Moreover, the contracts can freeze the necessary amount of money on B’s account and trigger money transfer once the cargo is successfully shipped.

Second, they can automate problem-solving in accordance with predefined rules. For instance, if the cargo damage is detected, smart contracts can fine the perpetrator identified in the distributed ledger.

Third, they can trigger tax payments, which is important for transactions with multiple parties. Otherwise, in case of tax evasion, it’s not only the violator who will be punished but also other stakeholders who may suffer losses to their reputation.

Lastly, smart contracts can check up the compliance of all the claimed conditions, including licenses, cargo value, balance, and others, and approve the agreement. Only if all the conditions are met, the agreement will be validated.

What’s Out There Now?

There are a few companies that are already unlocking the blockchain efficiency for logistics.

IBM and Maersk developed the solution tracking the cargo along its way. This software allows all the stakeholders to view the progress and check up all the documents associated with the shipment.

ZIM digitized a bill of landing that is considered the most important document in the ocean shipping. As blockchain prevents data forging, all the details of such a bill are highly reliable.

Although more companies are popping up on the market, there are still a lot of opportunities here. To seize them, you can develop your own blockchain-driven solution for the logistics needs. The genEOS blockchain ecosystem can help you to build it fast and cost-efficiently because it already delivers a ready-made toolkit.


With the help of its distributed ledgers and smart contracts, blockchain can considerably reduce such logistic risks as insolvency, cargo damage liabilities, tax evasion, and underinsurance.

Although there are companies working on this problem and offering their blockchain-powered solutions, the market is big enough for more players. The genEOS platform can help you to deliver your software and take your place in this market quicker than those developing their blockchain solutions from the ground up.

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