Beyond EDI, part 2: shippers, carriers look forward to ‘trustless’ freight transactions
Electronic data interchange (EDI) has traditionally allowed carriers
to edit transaction data before sending it to their customers. EDI
transactions include shipment status updates, invoices and other routine
Inherently, EDI can cause trust issues, which shippers and freight
brokers have tried to solve by using newer technology that integrates
directly with their carriers’ IT systems to automatically capture data.
An emerging technology called blockchain could further eliminate the
trust issues by securing freight transactions using encrypted “blocks”
of data linked together, distributed and stored on the computer systems
of all parties involved.
Information in this distributed database, a “hyper ledger,” cannot be changed or edited.
On its website, professional services firm Deloitte explains the links
between the blocks and their content are protected by cryptography that
makes it nearly impossible for transaction data to be destroyed or
Interestingly, no one owns blockchain; it is a protocol for the computer
code and algorithms that anyone can use to build applications.
The technology can speed up transactions, secure data transfers, and
eliminate intermediaries. It will not likely be free, however, as
carriers will likely have new transaction fees coming to their freight
A ‘trustless’ environment
Creating blockchain networks will involve negotiations among
stakeholders for what data will be made visible. Shippers, 3pls and
carriers can pre-negotiate all of their business rules for freight
transactions. Once those negotiations are established, trust issues
evaporate because data tells the story, which is something EDI could
never do, says Tim Leonard, chief information officer of TMW Systems,
which provides management software systems for transportation companies.
With new technologies, carriers and shippers are sharing data in near
real time to eliminate visibility issues that may cause mistrust.
“The more you capture those business rules in negotiation, the better
the blockchain becomes,” he says. For example, a blockchain network
could recognize a carrier delivered a load and trigger funds in escrow
to be released automatically for the freight payment.
Leonard estimates that 40 percent of back office labor could be
eliminated by automated freight payment applications, which would render
credit and collections obsolete.
TMW Systems has been working on blockchain applications. One of the
first steps was to develop a “metadata configuration” called the Trimble
Freight Cloud. When negotiating contracts or data sharing agreements
with shippers and brokers, a carrier can choose what data from the
Trimble Freight Cloud they wish to share, he says.
TMW won’t release data from the Freight Cloud unless the carrier
acknowledges that it has given a third party, or parties, the necessary
authorizations to grab the information, he says, that may include
accounting data, trip moves, stops, shippers, consignees, commodity
types and more.
McLeod SoftwareLike other technology suppliers, McLeod Software is now
in the discovery phase of how it will participate in the emerging
blockchain applications, says Robert Brothers, manager of product
“We know we will end up being part of the transactional record,” he
says, and believes that shippers will be the ones who drive the adoption
of blockchain technology among carriers.
“Our role is to make sure there are standards so that implementations of
blockchain do not end up being different for every shipper and every
transaction,” Brothers says.
Craig Fuller, founder of the Blockchain in Trucking Alliance (BiTA),
predicts that blockchain will become the predominant technology in the
trucking industry within a decade. BiTA’s mission is to educate
technology suppliers, trucking and logistics members on the technology
and to develop common standards for blockchain applications.
More than 60 companies have already applied to be members of BiTA. On a
larger scale, Deloitte predicts that at least 10 percent of the global
GDP will be stored on blockchain platforms by 2025.
Food supply chains stand to benefit the most from blockchain, says
Stanton Whitney, a partner at Infosys Consulting, a global technology
services and consulting firm. The technology makes it possible to better
manage supply chains and, perhaps most importantly, trace contamination
in food quickly to the source and determine which products are
IBM is now working with a number of companies in the foods business on
blockchain applications. Companies involved include Golden State Foods,
Nestle, Unilever, Walmart and Tyson.
Bob Wolpert, senior vice president of GSF Logistics, the company that
manages transportation for Golden State Foods, describes blockchain as a
“cloud-based fabric” that will weave together the various “handshakes”
that take place today between various IT systems in the supply chain by
using EDI and APIs.
Golden State Farms Semi-TruckBy using blockchain, GSF Logistics will
have single-system access to a complete chain of data events as food
moves from the origin to the final destination. The chain of events will
include temperatures, load tracking, certificates of quality and other
details at every stage, and will be “immutable, secure, and real time,”
GSF Logistics operates more than 1,000 tractor-trailer combinations to
support its last-mile distribution of products to customers, which are
some of the largest restaurant chains in the world. GSF Logistics runs
more than 60 million miles per year.
Paper Transport, a 700-truck carrier based in Green Bay, Wis., is a BiTA
member. Peter Covach, director of information technology, likes the
idea of a distributed hyper ledger to “verify transactions as they
occur” to eliminate disputes about who is to blame for a late delivery
or detention event, he says.
Parties involved in a freight transaction — shipper, consignee, 3pl,
carrier and freight visualization partners like FourKites — currently
work with different systems and all have different versions of the
truth, so to speak.
“I think the value (of blockchain) comes in eliminating the amount of
effort and manpower that goes into reconciling events,” agrees Ben
Schill, vice president of Paper Transport. “It’s not going to speed up
the delivery of a truck, but it will create significant improvements in
the actual operation by eliminating all of the slop and backend support
that goes into supporting and reconciling what happened.”
Blockchain has the potential to be disruptive, but given the amount of
change the trucking industry has already gone through in the last few
years, Schill and Covach want Paper Transport to be in a position to
take early advantage of new opportunities.
“If we decide to stay status quo as an industry in 30 years we will be
phased out,” Covach says. “If we are not constantly re-evaluating new
technology, there is no way we are going to stay in competition with the
Ubers and Googles of the world.”
Original article provided by: http://www.ccjdigital.com/beyond-edi-part-2-shippers-carriers-look-forward-to-trustless-freight-transactions/
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