The first time Craig Fuller heard of “bitcoin” and “blockchain” was 2011. He was running TransCard, an over-the-road fuel card business, when an entrepreneur gave him an opportunity to create a bitcoin ATM.
Fuller decided to pass up an offer of 1,000 bitcoin per month to lead the ATM venture. After selling his fuel card business to U.S. Bank in 2012 he did some research and realized what he had turned down.
One bitcoin is worth more than $4,000 dollars, he says. He could have been making $4 million per month.
“I missed out on an opportunity because I was not paying attention,” he says.
This may be the first time many CCJ readers have heard of blockchain, but it certainly won’t be the last.
It’s coming to trucking
Bitcoin is a decentralized digital currency that is one of many blockchain applications. Professional services firm Deloitte describes blockchain as:
A digital, distributed transaction ledger with identical copies maintained on each of the network’s members’ computers. All parties in the network can review previous entries and record new ones. The transactions are grouped in blocks, recorded one after the other in a chain of blocks (the ‘blockchain’). The links between blocks and their content are protected by cryptography, so previous transactions cannot be destroyed or forged. This means that the ledger and the transaction network are trusted without a central authority – a ‘middleman’.
The technology has a future in trucking, and many other industries, because it can speed up transactions, secure data transfers, and eliminate intermediaries. No one owns blockchain; it is a computer code and set of digital algorithms anyone can use, but there could be transaction fees for using applications in a blockchain network.
As an example of what the technology can do in the trucking industry, Fuller says the way people buy and sell used trucks will change by using a distributed ledger that provides members of a blockchain network access to all of the previous ownership, maintenance, driving and tire records. This will help people make faster and more informed decisions.
Fuller recently created a non-profit organization, Blockchain in Trucking Alliance (BiTA), with a mission to educate its members and develop common standards for blockchain applications. BiTA will have no direct commercial interests other than helping its members benefit from working together to create applications.
Fuller sees an opportunity for his current business to be part of blockchain networks. He is the chief executive of TransRisk, which is creating a first-of-its-kind trucking futures market that shippers, brokers and carriers will use to hedge their risks from rate volatility. Fuller predicts blockchain will become a predominant technology in the trucking industry within a decade, and already 60 companies have applied to be members of BiTA.
[related-post id=”151596″/]On a larger scale, Deloitte predicts that at least 10 percent of the global GDP will be stored on blockchain platforms by 2025.
Fuller says blockchain is more than an evolution of the electronic data interchange (EDI) and application program interfaces (APIs) that carriers use to share information with customers, vendors and other parties. It leapfrogs these technologies and is coming to supply chains near you.
IBM has made a number of big announcements like collaborating with Maersk to use blockchain technology to help transform the global, cross-border supply chain. IBM also partnered with food giants Nestle, Unilever and Walmart to develop applications to trace the source of contaminated produce in mere seconds.
Mauricio Paredes, vice president of technology for PS Logistics, welcomes these and other new developments.
“Through blockchain technology every transaction in the trucking ecosystem can be interconnected, providing the potential to dramatically change workflows and the way people do business for the better,” he says. PS Logistics was one of the first companies to join BiTA.
PS Logistics operates P&S Transportation, one of the largest flatbed carriers in the United States. Paredes sees the potential for a completely digital and interconnected proof-of-delivery process. Shippers, 3pls, carriers and anyone else involved in the movement of goods should be able to efficiently and securely update a digital bill of lading to benefit all parties, he says.
Peter Covach, director of information technology at Paper Transport, a 700-truck carrier based in Green Bay, Wis. — another BiTA member — says that a distributed ledger will “verify transactions as they occur.” This development would eliminate disputes about who is to blame for a late delivery or detention event.
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.”
Schill also sees an opportunity to use blockchain to de-fragment the trucking industry. With a common network, carriers can bring together capacity to compete against the likes of Uber Freight.
“Blockchain can do the same thing which is going to be beneficial in the end to consumers,” he says.
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.”