Blockchain’s promise goes beyond fintech

The application of blockchain is well known in financial services, but lesser known is the technology’s potential in reducing the cost of peer-to-peer data and resource transfer, removing the need for third parties and middlemen across a variety of industries.

In the logistics industry, for example, blockchain has the potential to completely revolutionise supply chains, by radically simplifying and accelerating operations for manufacturers, fleet managers, brokers and shippers across a business network. 

To illustrate the optimised information flow, let us use an example of sending a shipment of tulips from Holland to Singapore. This shipment will pass through multiple parties in the business network, across various modes of transportation before reaching its destination.

It starts at a Dutch farm where a truck will pick up the tulips and transport them to the dock. Because all members in the business network can view all the transactions in this shipment process without time-consuming reconciliation, the trucking company could be paid immediately once the ledger has been updated to indicate that the shipment has arrived safely at the dock.

The flowers are then loaded onto a cargo ship bound for Singapore. As tulips require cold temperature storage, the conditions of carriage may include penalties should the temperature of the flowers, which can be monitored using sensors, exceed certain thresholds.

If the cold storage facilities were to break down en route, penalties and conditions could be automatically levied and insurance companies notified. The sensor readings are posted onto the ledger, so all parties are kept abreast of the condition of the flowers.

As seen from this example, blockchain can track and trace the chain of custody between different modes of transport in a supply chain. Because everyone in the supply chain can view and trust the transactions posted, blockchain can reduce the time required for reconciliation and enable faster processes.