TMW’s Chief Technology Officer Tim Leonard and FreightWaves’ chief data scientist Daniel Pickett were at the Truckload Carriers Association’s 80th Annual Conference in Kissimmee, Florida, this week, presenting a series of conversations about blockchain in transportation to an audience of industry executives.
The series of three panels, called “Finding Your Place in the Blockchain Revolution,” represented a fruitful collaboration between the storied transportation software incumbent and the freight markets media startup. Pickett outlined some of the obstacles to the mainstream adoption of blockchain technology and Leonard dove deeper into TMW’s working groups’ use cases that addressed those issues.
“If we accomplish one thing today,” Leonard began, “we want you to gain an awareness about being involved with blockchain, what BiTA [the Blockchain in Transport Alliance] is doing, and how important blockchain is to transportation.”
“BiTA is the world’s largest blockchain standards organization focused on a specific industry,” said Pickett. “Blockchain is essentially DNA for data,” Pickett explained. “My DNA tracks my lineage, where I’ve come from, who my parents are, I can prove that I’m what came before my kids. I can’t change it—or if I try to, if I have a mutation, or a tumor, there are plenty of cells recording the correct version. That’s what blockchain does—it creates immutable, distributed records that are easily accessible and easy to write to, but impossible to change the history of.”
Then Tim Leonard explained how Trimble and TMW created think tanks to track activity in the burgeoning blockchain economy—everything from governmental regulatory schemes worldwide to intellectual property filings. “In January, there were 355 blockchain applications in production or going live; 3 months later, we’re looking at 475 apps and over 2,000 U.S. patents filed,” said Leonard.
“Ironically,” Leonard continued, “China is one of the areas where although they’ve outlawed cryptocurrencies, they’re really embracing blockchain. Dubai announced that their entire logistics back-end processes will be on blockchain by 2020, and Israel is capturing all of their port utilization data on blockchain.”
After the overview of the global explosion in blockchain investment, research, and development, Leonard and Pickett went into a discussion of specific agricultural supply chain applications for the technology.
“So, we’re not anywhere close to end-to-end supply chain on the blockchain,” said Pickett. “We’ve got a lot of miles to cross before then—but if there’s any one shop working on this whole cross-section, it’s Trimble.”
“We’ve made a lot of mistakes over the past 2-3 years,” said Leonard, laughing. “My mistake binder is about 3.5 inches thick. But really, to be able to sit with the Trimble Agriculture guys and walk through every data element, and every piece that was used to move a specific product—a tomato for example—it just blew my mind. The amount of data that is collected and has to flow to different supply chain participants is truly staggering. Information on a specific tomato and how it was grown, how much water, etc, gets moved from the grower’s data flow into a shipper flow, who then adds structures for service commitments to move that particular kind of perishable item, then that data flows to the carriers, and information about its transportation, its temperature stability while it’s being moved, all of that then flows into the customer, and ultimately to the consumer.”
“We came up with a fresh food traceability blockchain. If you’re gonna track freshness, the farmer and ag associations… that’s about 63 data elements just for freshness, in two categories,” continued Leonard. “It’s about data… it’s about knowing what specific data is associated across this entire path in the produce supply chain. If there were damaged goods, where is it recorded? Government agencies, insurance, are all interested in this. We can go back and say ‘no, this trucking company didn’t damage these goods.’”
Then Pickett went through some of the major issues with mainstreaming blockchain and explained how each one applied, or didn’t, to transportation and logistics. “The four biggest problems we have to solve with blockchain are scalability, data privacy, collaboration, and commercialization,” said Pickett. “The issue with scalability is that the worldwide Bitcoin network handles a few dozen transactions a second, where Visa is doing almost 60,000 per second,” said Pickett. “This is an issue for public blockchains but because they are doing proof-of-work algorithms, which make it more difficult to submit fake transactions and rewards Bitcoin miners for their consumption of electricity. On a private or permissioned blockchain, the nodes are relatively trusted and therefore you don’t need the proof-of-work, and therefore you need fewer transactions per second. Scalability isn’t really an issue for permissioned enterprise blockchains.”
Data privacy is not so much of an issue, either, because with permissioned blockchains, participants can choose how much of their data to share and with whom, in any given transaction. Organizations like BiTA are trying to promote collaboration. “We’ve discovered that it’s not enough for all of the players in the transportation sector to come together around shared data standards; we also need shippers, further up the supply chain, in all different kinds of verticals, whether it’s agriculture, or retail, or automotive parts, etc,” said Pickett.
Tim Leonard answered a question from an audience member about the role that data visibility companies like 10-4 or FourKites would have in the new blockchain-powered transportation industry. “There’s going to be a lot of good revenue generation capability. What we’re discovering is, the business cases around visibility… you needed all the data before it, and the data behind it. If you get into a visibility play where you’re hosting the blockchain network, that has tremendous value. The network itself, the data (the ledger), then the apps that run… all of three of those have ability to generate revenue.”
Pickett ended his contribution to the conversation with a question about winners and losers in the new world of blockchain. “This is the slide that always makes somebody mad,” he said, laughing. “Winners and losers? Anyone can live on either side of the divide as long as you’re paying attention. But people who make their money on information asymmetry? A shared public ledger is a business risk for them.”
