Sometimes a buzzword gets so overhyped that it deserves some light-hearted mockery. That seems to be the case with “blockchain.” While it’s true that not every industry can benefit from a distributed-ledger technology, the trucking industry most certainly can. In fact, a new consortium called the Blockchain in Transport Alliance (BiTA) is working to apply blockchain to solve some of the most intransigent problems in trucking.
Trucking is a massive industry that affects virtually every American. Trucks move roughly 70 percent of the nation’s freight by weight, according to the American Trucking Association. The Association also found that in 2015, gross freight revenues from trucking were $726.4 billion, representing 81.5 percent of the nation’s freight bill.
Companies hailing from each piece of the trucking supply chain have joined BiTA, including: UPS, Salesforce, McCleod Software, DAT, Don Hummer Trucking and about 1,000 more applicants. [Full disclosure: Our company,Transfix, is also a member.]
A private blockchain for trucking
Blockchain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible like a truck, or intangible like an insurance requirement. The blockchain that supports cryptocurrencies like bitcoin is a public network open to any investor with millions of users around the world. The blockchain we in the U.S. trucking industry foresee is a private one for shippers, carriers and brokers in the BiTA consortium.
As a standards organization, BiTA aims to create a common framework to spur the development of blockchain applications for logistics management, asset tracking, transaction processing and more.
Why do we need blockchain? Because trucking is an inefficient industry. Manufacturers have a hard time finding trucks to transport their goods. That’s not because there aren’t enough truckers who want the job. In fact, truckers drive more than 29 billion miles with partial or empty truckloads.
According to the American Trucking Association, there are roughly 1.5 million trucking companies employing approximately 3.5 million truck drivers. But 90 percent of these companies have six trucks or fewer. This enormously fragmented industry struggles to match shippers (the demand) with carriers (the supply).
Blockchain as the Holy Grail
Matching shippers with carriers is just one of the problems blockchain could solve. I know because my co-founder at Transfix, Drew McElroy, is a dyed-in-the-wool trucking devotee. Drew was born into the trucking business. His parents, and later Drew, ran a trucking brokerage company with the express aim of matching shippers with carriers. It was brutally inefficient, taking up to three hours of calling and faxing orders to line up a single delivery.
If implemented well, blockchain could be the Holy Grail that makes the entire trucking supply chain more efficient. Imagine a cadre of shippers, carriers and brokers collaborating on a secure, frictionless network.
By Jonathan Salama
This article originally appeared in Techcrunch