UPS Bets Big on Blockchain.
The FBI estimates that cargo theft causes an annual loss of approximately $30 billion per year (U.S.), with an average theft value of $190,000. In effect, cargo theft can cost consumers up to 20 percent more for their goods. And though most of the problem areas have been well-documented for decades, the distributed nature of ownership has instilled little accountability in any of the industry’s stakeholders.
However, disruption is coming to the industry in the form of blockchain technology, which promises to deliver a cheaper and more efficient system of managing logistics. Innovative startups, as well as major incumbent parties, are investing enormous amounts of time and resources in blockchain development.
Most recently, UPS announced they were going to join the Blockchain in Transport Alliance (BiTA), a forum for the development of blockchain technology standards and education for the freight industry. The alliance hopes to spur standards development for the shipping industry as a whole by implementing a secure blockchain system.
So why? and more importantly why now?
In 2015, freight and logistics was nearly a $1.5 trillion industry, and that number is only expected to go up. But while we may be relying more and more on the shipping industry, its foundation is crumbling. The industry was not built with this level of growth in mind, and is prone to both inefficiency and fraud — which may be why UPS is betting big on blockchain.
Basing shipping and transactions on a blockchain system will also increase transparency, potentially giving consumers much more information about the process and location of their package.
If this turns out to be a successful integration, this is fantastic news for consumers. Not only could shipping costs be lower, but shoppers might be granted more information, transparency, and ensured security throughout the process. Linda Weakland, UPS’s Director of Enterprise Architecture and Innovation, explained in a company statement:
The technology has the potential to increase transparency and efficiency among shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders.
References
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