When most people hear the term “blockchain technology,” more likely than not, they’ll be thinking of Bitcoin and other cryptocurrencies that have already disrupted the way people around the world conduct their financial transactions.
However, blockchain technology’s influence and potential for innovation extends far beyond the financial sector — and few companies better illustrate this ongoing shift than ShipChain. By leveraging the innate advantages of blockchain technology, ShipChain seeks to transform one of the oldest market segments in existence: the shipping and logistics industry.
While logistics may not be as flashy as the other industries more regularly associated with tech breakthroughs, there is no denying its widespread impact and importance to the global marketplace. After all, without quality logistics, a company like Amazon would never have been able to grow into the massive brand it is today — and the demand for shipping products is only expanding. In fact, the global logistics market is expected to nearly double in value from $8 trillion to $15.5 trillion by 2023.
As the industry grows, however, it faces a wide range of problems that limit the effectiveness and profitability of logistics providers. Cargo theft, fraud and delayed or inaccurate delivery fulfillment are keeping many logistics companies from keeping up in a tech-fueled world that thrives on accuracy.
Cargo theft alone results in billions of dollars in lost revenue each year, and difficulties in effectively managing shipments become even greater when so many companies still rely on pen and paper. Many providers and carriers use different methods of recording information, increasing the risk for miscommunications. Unnecessary middlemen drive up prices. Human error abounds, creating problems for distributors and end customers alike.
ShipChain’s mindset is simple: the use of blockchain technology has the potential to disrupt the logistics and shipping industry for the better. Streamlined, secure and traceable, blockchain can completely eliminate many of the problems currently faced by all parties involved in the process.
How the Tech Works
ShipChain operates using Ethereum, a blockchain platform that enables users to create smart contracts to digitize and automate the record-keeping aspects involved in a transaction. When an order is first placed, an Ethereal Smart Contract creates a “Bill of Lading” containing all relevant information related to the transaction. The contract is written in code, and when certain conditions are met, it is automatically executed. For example, payment is released from escrow only once the delivery has been made and the Smart Contract is verified.
ShipChain’s contracts help users handle all the details associated with the shipping process, from planning routes and managing contracts to outsourcing transportation and connecting with business partners. This streamlines collaborative efforts by automating several key tasks, such as determining which transportation route and method will be best for a particular shipment. Carriers can use distance, fuel usage and even weather or traffic conditions to determine the best route. Geo-waypoints then ensure accountability during the shipping process.
As with other blockchain applications, security is preserved through the use of an encrypted sidechain, while the initiation and completion of the contract takes place on the primary blockchain.
Ultimately, the goal behind ShipChain’s platform is that all parties involved in the transaction — shippers, buyers, carriers and so on — will be able to track the progress of the shipment with complete transparency. Instead of relying on human tracking, everything is tracked by a blockchain algorithm. This eliminates human error and the risk for fraud. In fact, it eliminates the need for freight brokers altogether.
Another unique aspect of ShipChain is its incentive program. Drivers and carriers who provide timely deliveries and minimize idle time may receive additional tokens valued at a percentage of their transaction, which can then be used on cryptocurrency platforms or in exchange for other rewards.
The end result is that carriers and buyers will be able to handle their logistics needs more efficiently, speeding up deliveries, eliminating error and lowering prices for everyone involved.
Making an Impact
As with other blockchain platforms, ShipChain requires the use of specialized tokens to complete transactions — in this case, a “SHIP” token. Users must have a full SHIP token in order to use ShipChain’s platform, and all transactions must also be completed with these tokens. However, users can quickly purchase tokens using other forms of currency (including cryptocurrency), ensuring fast and efficient transactions.
There is clearly demand for what ShipChain has to offer. While still in beta, the company managed to raise over $30 million in funding while also landing the backing of big-name entrepreneurs like Kevin Harrington (of Shark Tank fame) and Brian D. Evans. The company has also been accepted as a member of the Enterprise Ethereal Alliance (EEA), a prestigious group that also includes global brands like Microsoft, MasterCard and Intel.
As ShipChain’s initial successes and lofty ambitions illustrate, the potential for blockchain technology is truly limitless. As blockchain platforms become more widely accepted, transactions and contracts across even more industries will soon gain the benefits of these secure, streamlined platforms.