Since the rise of Bitcoin, blockchain has been a hot topic. This digital solution, however, represents only a small piece of the pie. There are a wide number of applications in which we can use blockchain, including the transportation industry.



See also: What is Blockchain 1.0



What is Blockchain, Really ?


If this technology is so complex, why call it “blockchain?” At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).




See also: Blockchain application


“Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts:


1. Blocks store information about transactions, say the date, time, and dollar amount of your most recent purchase from Amazon. (NOTE: This Amazon example is for illustrative purchases; Amazon retail does not work on a blockchain principle)



See also: What is Blockchain 2.0




2. Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon.com, Inc. Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.

3. Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Let’s say you made your splurge purchase on Amazon, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart because of their unique codes.




While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.





Blockchain Potential in Transportation


Big players in transportation are recognizing the opportunity blockchain represents for the industry. The Blockchain in Transport Alliance (BiTA), for example, was created as a forum for blockchain education and standards development for the freight industry. There are already 2,000 members including UPS, FedEx and Bridgestone.

In transportation, blockchain could increase the efficiency and transparency of the entire shipping process including matching shippers with carriers more easily, streamlining payments, reducing the number of intermediaries and more.

One major application transportation players foresee is smart contracts between shippers and carriers. With smart contracts, conditions are predefined and recorded on the blockchain. Once conditions are met, the smart contracts are automatically created. Then, after transactions are recorded and validated on the blockchain, payments are immediately sent. This streamlines the process by automating steps and eliminating intermediaries and their associated costs.

Shippers would also have greater visibility of the entire supply chain with blockchain since each party validates and records transactions throughout the process. This increased transparency and tracking ability would in turn discourage cargo theft, which continues to plague the industry and in 2016 resulted in losses of over $114 million.

In addition, there would be a heightened level of trust in the entire shipping process. Instead of having to rely on people’s word to determine if a shipment was received on time and intact, multiple parties can validate the successful transfer on the blockchain. This discourages fraud and would also reduce carrier insurance.

Companies are already beginning to run pilot programs with blockchain. For example, IBM teamed up with Maersk and have had successful runs tracking paperwork for shipments as far as Kenya to the Netherlands and Colombia to California.


Blockchain is something we should expect to see more of across many industries. While wide scale adoption is still a few years away, it is important to understand blockchain and its potential to streamline processes in transportation. If you are a major player in the transportation industry, you may want to consider what customer problems you can solve using blockchain before you get left behind.