IBM’s technologists overcame more than a year of legal wrangling with the company’s intellectual property attorneys and were finally able to join the Blockchain in Transport Alliance (BiTA). Now the relationship is growing deeper: yesterday, an IBM executive reported on his company’s research into blockchain for transportation to BiTA’s members.
BiTA is a member-led industry organization dedicated to building open-source and royalty-free data standards for blockchain in the transportation and logistics industry. At Thursday’s BiTA Spring Symposium, which followed Transparency19 in Atlanta, IBM’s vice president of blockchain initiatives for the supply chain Stephen Rogers spoke to the assembled membership and working groups.
IBM has already proven its leadership in the ‘blockchain for the supply chain’ space. FreightWaves reported on TradeLens, IBM and Maersk’s joint project to solve inefficiencies in container shipping last August; at roughly the same time IBM opened up IBM Food Trust, which began as a pilot project to create visibility into Walmart’s leafy green supply chain.
“It took a year between the business side and legal side to get here. The legal side kept saying there are risks, there are risks, but we’re here, and that makes me the happiest person in the world,” Rogers began. IBM’s in-house research institute, the Institute of Business Value (IBV), has created a virtual library of research reports on blockchain, many of them pertaining to the supply chain. Rogers presented the results of the IBV’s recent research.
One of the more interesting claims that Rogers made early in the talk concerned the relationship between blockchain and the internet of things (IoT)—he said that distinction would start to blur.
“In five years, blockchain will be the operating system for IoT,” Rogers predicted.
The transportation industry faces many challenges, but has a long history of resisting all but the most essential innovations, Rogers argued. Those challenges include physical and digital threats in security, inefficiencies in logistics tracking and payment due to intermediaries, uncertainty and volatility resulting in unforeseen circumstances, and first movers and digital giants entering market and challenging the status quo.
Then Rogers began outlining the results of a large survey of transportation industry executives. The requirements to be a respondent included the following: respondents were limited to the CFO, COO, CTO, and CIO roles; their organizations must be working with or planning to work with blockchain; and the respondents must be familiar with their organization’s blockchain strategy. The survey results included input from executives from 16 countries, and about a third were based in North America.
Although transportation executives believe that they will begin actively participating in blockchain networks on a slightly later time scale than other industries (2020 rather than 2019, the average of other industries the IBV has studied), more executives in transportation said they would be on the blockchain than any other industry.
The first wave of industries studied included banking, financial markets, healthcare, government, and electronics. A little more than half of those executives—53 percent—said that they would be active participants on a blockchain by 2019. But 70 percent of transportation executives said they would be active participants on a blockchain by 2020.
Rogers said that he spoke to an executive at a medium-sized trucking company who said “I’m not going to blockchain anybody, but I think there’s a lot of people who want to blockchain me.” In other words, the executive believed that while his company would not necessarily be an agent of change, he felt like other companies would be knocking on his door and trying to get him to join their networks.
When transportation executives were asked which business functions had the highest potential to be improved through blockchain implementation, 26 percent said shipment status or tracking, 21 percent said payment processing, 20 percent said empty container management, and 20 percent said shipment security management.
About 15 percent of industry participants are ‘first movers’ in the adoption of any new technology, and transportation is similar: 14 percent considered themselves first movers. A nearly unanimous majority of self-identified first movers in transportation — 97 percent — agreed with the statement that they expect blockchain to help remove transactional inefficiencies from the transportation ecosystem.
Rogers identified other potential use cases for blockchain in the supply chain, noting ruefully that the amount of organic food sold in the United States was about twice the amount that was produced in the U.S. or imported. The implication was that immutable ledgers recording the actual conditions under which food was grown, harvested, and transported could reduce fraud.
Other topics covered in Rogers’ talk included reducing supply chain waste from empty containers, accelerating payment cycles, and chain of custody verification for high-value shipments like biopharmaceuticals and luxury goods. Rogers ended his talk by outlining three basic pieces of advices for companies who want to explore blockchain technology.
“Learn intentionally; invest wisely; disrupt strategically,” Rogers said. ““Leaders will dedicate resources to proven blockchain improvements, but transformation requires enterprise-wide investment in fundamentals, including digitizing and instrumenting transport operations.”