How Blockchain Technology Will Revolutionize The Multi-Trillion Dollar Freight Industry

The shipping industry is the lifeblood of the modern, global economy. There are over 20 million shipping containers currently spanning international waters, who, together, transport over 55 billion metric tons of goods each and every year. To put that into more context, the multi-trillion dollar shipping industry, which accounts for 10% of the United States’ GDP, is responsible for hauling nearly 90% of everything we buy. Everything from the fancy computer you rely on at work to the “fresh” banana you ate for breakfast was likely, in some way, affected by the freight industry.

Though not the sexiest industries from the outside, shipping and freight make up the backbone of the global supply chain and are core components of democracy and free trade. Without them, prices would skyrocket and the world would be a less accessible place for everyone.

The industry, however, faces an increasingly large scaling dilemma as a volume of consignment increases exponentially, while the current infrastructure continues to show signs of weakness and instability.

The problem is that much of the technology supporting all of the delicate (and largely inefficient) processes that go into handling international logistics were largely built in the early days of the internet (before best practices of database handling and automation were put into place).

And on top of that, the mere process of shipping an item from one place to another is as cumbersome as it is complex. For sending even just one shipment across global waters, there are literally dozens of stakeholders responsible for handling, regulating, and insuring your container. You have a motley mix of shippers (the people who need their freight moved), brokers (coordinators who assign your shipment to various movers), carriers (who provide transportation services across sea, air, truck, rail, etc.), and drivers (who operate a single vehicle within a larger fleet) – all of which are fighting for their own incentives and payout.

Throughout the several month long operation, there is very little transparency or accountability for the shipper to hold onto that insures the timely and safe delivery of their product. If a package is slow or, as it often times is, late, the customer has no way of knowing if and when the problem will be fixed. Due to ownership fragmentation (where we do not always know who is responsible for which part of the shipping process), it is estimated that annual cargo theft losses exceed $30 billion USD – no one wants to be accountable.

This logistical nightmare contributes to the 30%+ markup that middlemen buffer to the natural price of products so that, by the time a good makes it to your home, it is at a completely different price point.

Are the details too messy for you? Here is the bottom line:

The shipping industry is extremely complicated, yet vital to the world as we know it. Because of that, there are massive opportunities for technology, if executed in the right way by the right people, to dramatically improve the industry.

That is exactly what Shipchain, a blockchain based platform designed specifically to handle the shipping, freight, and logistics industry, is setting out to do. At their core, they leverage the power of smart contracts to track every stage of a product’s journey.

From the time an order is placed to moment it leaves the factory, field, or farm to reaching the final delivery at the customer’s doorstep, Shipchain verifies (with a smart contract) and updates (via a public ledger) all necessary stakeholders. They use the Ethereum blockchain to track “individual encrypted geographic waypoints that account for each smart contract. At the time of delivery and confirmation, the contract will be completed and recorded on the main blockchain, releasing any payment escrows.”

The hope is that Shipchain can bring more visibility to space and allow shippers and carriers to communicate more easily, reducing miscommunications and costly (time-sensitive) errors that cause delays, big law-suits, and tons of waste.

One of their big bets is that they can eradicate the need for freight brokers, who currently drive up the price of handling freight and are largely prone to human errors. Brokers, today, find loads, mark them up, and sell them to carriers – decreasing profits for everyone else involved. If all goes well, Shipchain will supplant the need for brokers entirely by “allowing carriers the ability to find shipments, intelligently route their team for multimodal transportation, and use a smart contract to verify and confirm each and every stage of the journey.”

Beginning as a web platform, the decentralized brokerage will be an open marketplace for shippers and carriers to connect and exchange business. To access the network, interested parties will need to own at least 1 full SHIP Token that gives them the “Shipchain Membership” – an access card to the blockchain for all sides of booking and tracking shipments.

With blockchain applications, humans can finally solve for trust, transparency, and accountability issues that have plagued numerous (important) industries for centuries. We know, as in the case of shipping and freight, we can do this in a scalable and global manner.

But we know that this implementation is just one of the many new and innovative shifts that are likely to disrupt and improve the way many important industries operate.