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UPS Steers Into Blockchain Trucking Alliance

Since the concept of blockchain technology was first released in 2009 as the technology fabric supporting Bitcoin, numerous applications have been continually built on top of the infrastructure. The blockchain’s wide adoption as an alternative application for legacy financial systems has fueled proposed uses in numerous other industries, among them healthcare and manufacturing.

Now heightened interest around blockchain technology is emerging in the transportation industry. There has been a recent announcement that the global package delivery company United Parcel Service (UPS) has joined the Blockchain in Trucking Alliance (BiTA). UPS and Coyote Logistics — the latter a technology-driven, non-asset based truckload freight brokerage company that UPS acquired in 2015 — are a part of over 300 companies that have applied for membership to BiTA.

According to BiTA’s website, the organization’s mission is to foster “a forum for the promotion, education, and the encouragement to develop and adopt blockchain application standards in the trucking, transportation, and logistics industries.” BiTA asserts that blockchain offers the opportunity for greater clarity, transparency and trust within the supply chain space, noting that without a common set of cross industry standards, those barriers will continue to exist.

The BitA consortium is just one initiative driving the adoption of blockchain technology within this industry realm. Led by the efforts of shipping behemoth Maersk, a mass of independent, blockchain-centric projects within the logistics sector are taking place with the intent to digitize trade data in collaboration with software providers IBM and SAP SE.

It is for this and other reasons that UPS is the latest in a number of shipping and logistics companies to examine the efficacy of the blockchain’s rich array of distributed solutions. Inspired by how Bitcoin and its blockchain-based distributed network work, this shipping industry leader believes that tech advancements taking place in this realm could offer an elixir to its prevailing archaic model. At present, most shipping involves a massive amount of paperwork, including sales contracts, bills of lading, port documents and other vital documentation tied to the vessel and the cargo. 

These documents often flow through a long processional of parties tied to these cargo transactions. Take, for example, the practice of managing bills of lading amid a complex web of logistical connections: This process has become so convoluted and lengthy that it’s common for vessels to arrive at their destination for discharge of their parcels before the bills of lading even arrive.

Seen as a broader effort to address a similar set of issues, UPS believes that the need exists to establish industry standards and protocols that allow blockchain platforms to efficiently function together with established technologies. The belief is that the development of these standards will serve as a catalyst for greater UPS involvement in global trade and finance.

It is hoped UPS’ momentous leap into the blockchain technology movement will spark a number of industry improvements including greater tracking and payment performance among shippers, carriers, brokers, consumers and other supply chain stakeholders. The aim is to foster an enhanced supply chain ecosystem which allows for greater capacity, more rapid and secure transactions, fewer errors and lower labor costs.

Consumers could become the biggest beneficiary of UPS’ effort to create widespread transportation and logistics industry adoption of blockchain technology. Products would arrive more cheaply, rapidly and accurately through the efficacious use of the blockchain. Moreover, software providers, data providers, and trailer-leasing companies could realize massive productivity and cost-saving returns in their day-to-day operations.

Early Steps at Deployment

On the heels of their BiTA announcement, UPS’s initial foray into distributed technology involves the integration of blockchain technology into its customs brokerage business, with the aim of digitizing the company’s digital transactions. The blockchain would enhance transaction accuracy by replacing existing paper-centric, manual processes. This application would also offer a new modicum of securing those transactions ensuring more efficient deliveries for shippers that rely on UPS for customs brokerage.

While this recent move by UPS represents a significant step toward blockchain technology being embraced by the supply chain community, much work remains in terms of the development of open standards to boost the likelihood of long-term adoption.

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