BLOCKCHAIN AND INTERNET OF THINGS ARE

TRANSFORMING LOGISTICS INDUSTRY.

Contents
I. INTRODUCTION ...................................................................................... 1

i. GLOBAL CHALLENGES IN LOGISTICS .................................................... 1

ii. LOGISTICS AND ITS ROLE IN SUPPLY CHAIN MANAGEMENT. ........ 4

iii. SMART LOGISTICS. ................................................................................... 5

II. BLOCKCHAIN. .................................................................................... 11

i. BENEFITS OF BLOCKCHAIN IN LOGISTICS ......................................... 12

ii. CASE STUDY - TRADELENS. .................................................................... 15

III. INTERNET OF THINGS. .................................................................... 21

IV. BLOCKCHAIN AND INTERNET OF THINGS: LOGISTICS

FUTURE......................................................................................................... 22

V. CONCLUSION ..................................................................................... 22

VI. BIBLIOGRAPHY. ................................................................................ 22

2
I. INTRODUCTION

The COVID-19 epidemic has already disrupted the global logistics business

for two years, and new difficulties are already emerging.

Transportation managers must choose wisely to reduce road mileage and

related expenses as gasoline prices hit record highs. Despite a high level of

demand, persistent product shortages continue to disrupt the supply chain,

influence erratic shopping habits, and raise expectations for quick delivery.

The well-known labor shortages in the sector are not about to go away any time

soon. With production halts, a lack of raw materials, and blocked shipping

ports, the European conflict and China's energy issue are causing even more

uncertainty.

i. GLOBAL CHALLENGES IN LOGISTICS

International businesses are strongly impacted by increasingly globalized and

complex supply chains. Supply chain stakeholders need to handle an increased

amount of information while keeping track of more transactions, recording

performance, and forecasting activities.

During the Logistics process, multiple parties require joint execution across

every process step. Today, cooperation activities are conducted manually and

1
 offline, which often leads to unnecessary steps, and mistakes. By working

together and sharing data to create transparency, global supply chain efficiency

will be possible.

Coupled with the complexity and globalization of supply chains, logistics

functions are facing some challenges related to sharing information along the

supply chain securely. This is relevant in several ways:

1. Transparency: The flow of information to support supply chain planning and

controlling (e.g., production or distribution)

2. Speed and efficiency: Getting the right goods to the right place at the right

time through digitized and efficient processes.

3. Traceability: Reconstructing the origin and movement of goods, and keeping

track of materials at every stage in supply chain (including proof of location,

audit trails and certification)

4. Payment: Transferring money to suppliers efficiently and with reliable

documentation.

In the other hand, clients also face the following specific challenges for

logistics function:

• Multiple organizations join in long and complex supply chains.

• Lack of trust and limited collaboration.

2
• Processes that are manual and paper-based, with heavy transportation costs

associated with paperwork.

• Lack of end-to-end transparency caused on by a stifled information flow,

difficulties with tracking and tracing, and inefficient use of resources.

Besides, there are also challenges in applying techonology to logistics

activities. “Industry 4.0: building the digital enterprise” the report was

published by PwC in April 2016 pointed to concerns about the adoption of

technology in bussinesses.

Focus on people and culture to drive transformation.

Businesses must ensure that employees are aware of the changes the

organization is undergoing and how they can participate in them. According to

the industrial companies was interviewed in the report, the biggest obstacles

are internal ones related to culture, organization, leadership, and skills rather

than external ones like whether or not the necessary infrastructure, standards,

and intellectual property protection are in place, or whether issues with data

security or privacy can be resolved.

The biggest obstacle to using data analytics, according to survey respondents,

is a lack of skills or competencies among the company's workforces. Therefore,

it should come as no surprise that more than two-thirds (69%) say that
improving internal data analytics technology and skill levels is the single most

effective way to increase data analytics capabilities. A small percentage of

businesses (18%) anticipate using M&A to acquire outside companies, and

some firms also claim that external partnerships can play a role through the

provision of technology or training.

Lack of digital culture and training is the

biggest challenge facing companies
CONCERNS AROUND LOSS OF CONTROL OVER YOUR
14%
COMPANY'S ITELLECTUAL PROPERTY
BUSINESS PARTNERS ARE NOT ABLE TO COLLABORATE
16%
AROUND DIGITAL SOLUTIONS
SLOW EXPANSION OF BASIC INFRASTRUCTURE
18%
TECHONOLOGIES
LACK OF DIGITAL STANDARDS, NORMS AND
21%
CERIFICATION.
INSUFFICIENT TALENT 25%
UNRESOLVED QUESTIONS AROUND DATA SECURITY
25%
AND DATA PRIVACY IN CONNECTION WITH THE USE…
HIGH FINACIAL INVESTMENT REQUIREMENTS. 36%
UNCLEAR ECONOMIC BENEFIT AND DIGITAL
38%
INVESTMENTS
LACK OF A CLEAR DIGITAL OPEARTIONS VISION AND
40%
SUPPORT/LEADERSHIP FROM TOP MANAGEMENT
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Source: Industry 4.0: Building the digital enterprise - 2016 by PwC.

ii. LOGISTICS AND ITS ROLE IN SUPPLY CHAIN

MANAGEMENT.

Logistics includes organizing and carrying out the storage and transportation

of products between various supply chain nodes. Facilities, personnel,

4
equipment, and other resources are coordinated by logistics to make sure that

things move when they should and that there is room for them at the next stop.

The supply chain department examines the complete route and flow of

commodities. This is known as the logistics role in the supply chain. Supply

chain management considers everything, from the transit of finished items to

the storage of raw materials.

A few decades ago, supply chain management did not receive much attention.

However, supply chain management is now a crucial aspect of the economy. If

the supply chain is changed, it can give businesses a competitive edge. Losses

of raw materials or damage of final goods can be minimized with proper supply

chain management. In essence, maintaining the supply chain decreases the cost

of errors and waste. To ensure that the danger of loss is reduced during the

conversion of goods and inventories, businesses must invest in logistics

activities.

iii. SMART LOGISTICS.

Technology-driven processes are imposed by Industry 4.0. On the one hand, it

forces action in the context of big data sets, and on the other, it makes it

possible to incorporate intelligence into gadgets, goods, and services, and as a

result, factories and entire industry sectors. The word "smart" is frequently

used in this area. We can discuss the intelligent behavior of inanimate objects
that are capable of carrying out tasks that are typically done by people. In this

way logistics can also be intelligent as the process of planning, implementing,

and controlling procedures for the efficient and effective transportation and

storage (including inbound, outbound, internal, and external movements) of

goods including services, and related information from the point of origin to

the point of consumption for the purpose of conforming to customer

requirements (CSCMP, 2013). “Smart logistics is a logistics system, which

can enhance the flexibility, the adjustment to the market changes and `will

make the company be closer to the customer needs. This will make possible to

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improve the level of customer service, the optimization of production and make

lower the prices of storage and production” (Barreto, Amaral, & Pereira, 2017).

Source: connected and autonomous supply chain ecosystems 2025 - 2020 by PwC.

Working with partners in logistics, such as freight forwarders, carriers, or

warehousing service providers, is common. Economic sense, this makes sense

because it is uncommon for industrial firms to retain their own fleet and view

transportation as a fundamental competency. Compared to other supply chain

activities, logistics procedures include a very high number of partners and

external transactions (e.g., manufacturing). It is especially important to provide

seamless interaction throughout the whole ecosystem in order to manage and

improve logistics. It is crucial to integrate the movement of physical goods,

including incoming and outgoing logistics (transportation), intralogistics, and

warehousing, with the flow of information, including customer service, order

management, and transport and warehouse management. The core of the smart

logistics ecosystem is internal integration across functions and external

integration with consumers, suppliers, and service providers. Leading

businesses may use their logistics network as a strategic asset to assist them

better meet the demands of various channels, including the quicker delivery

times anticipated when they enter the B2B2C or B2C markets.

Businesses are waiting for a genuine innovation in logistics-related solutions.

Regarding technology and its applications, there is a lack of trust and

understanding. Many business executives still don't understand what

blockchain is or how it's changing the industry. Because blockchain is an

underlying technology and everything happen behind the scenes, it is difficult

to explain how it can provide a new type of infrastructure and a new wat to

digitize assets using tokens. By enabling businesses to increase efficiency,

transparency, and traceability, blockchain also increases the security of supply

8
chains by allowing for the sharing and verification of product origin and

authenticity.

The market for Internet of Things (IoT) in logistics was valued at US$ 39.07

billion in 2020, and from 2021 to 2027, total revenue is anticipated to increase

by 13.25%, or nearly US$ 93.36 billion (Global Industry Analysis and Forecast

(2021-2027)). IoT holds great promise for logistics operators, their corporate

clients, and end users. It benefits, among other things, operational effectiveness,

security and safety, customer satisfaction, and new business models. The entire

logistics value chain, which includes warehousing, freight transportation, and

last-mile delivery, offers these benefits. In the ensuing decades, these

components are probably going to become indispensable fundamentals of the

logistics industry, having an effect on IoT.

This article will discuss about the benefits of blockchain and internet of things,

and its role in logistics industry. Case studies will also be presented to analyze

specific situations and help reader have a clearer picture of the impact these

technologies have.

Blockchain.

With more stakeholders involved in supply chains directly or indirectly,

logistics is becoming more and more complex. Due to communication and end-
to-end visibility issues brought on by this complexity, logistics systems are

becoming ineffective. Transparency, dependability, and service demands are

rising for all supply chain actors at the same time.

The blockchain is developing as a potential answer to these problems.

Blockchain is generating interest in the industry, but has not yet achieved much

traction, according to PwC's analysis of the global digital supply chain,

"connected and autonomous supply chain ecosystem 2025." Only 5% of

businesses overall and 27% of digital champions 1 have already adopted

blockchain. This fact that some observers see enormous potential for the

technology to be implemented inside logistics activities.

Internet of Things.

The concept or experience of "connectivity" has become commonplace in a

world where we practically live online. We are utterly reliant on these

technological advancements and are glued to the connected world. Our

interpersonal interactions and personal entertainment are examples of how the

internet of things is rapidly influencing logistics.

1
Digital Champion = Companies with the
highest digital supply chain maturity level.

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 The complicated industry of logistics can benefit from Internet-of-Things

technologies. IoT devices will make the process of warehouse storage and port

shipment to manufacturers and final customers more efficient and cost-

effective. Examining every step of the logistics value chain, specialists

discover a way to link warehouse operations, warehouse automation, freight

transportation, and final delivery via an integrated IoT system.

II. BLOCKCHAIN.

Most businesses today usually stored individually data from transactions

between parties with no overview of all activities. Sharing data between parties

is typlically a huge trust issue that makes collaboration difficult. Blockchain

addresses this issue because data ownership is shared by all of the parties

involved.
 BLOCKCHAIN – HOW IT WORK.

The block is sent to all computers

A transaction requested A block that represents the
transaction is created and parties in the network

The block is added to the The network of computers

The transaction complete.
existing blockchain. then verifies and approves
the block.

i. BENEFITS OF BLOCKCHAIN IN LOGISTICS

Businesses believe blockchain applications in logistics have a lot of potential.

By producing an encrypted digital record that tracks commodities at every level

of the supply chain, the technology can address important problems. It makes

any abnormalities that could delay a shipment obvious, allowing businesses to

address issues promptly. and it can automate procedures while also simplifying

the verification of items, cutting down on paperwork and assisting in end-to-

end traceability. Blockchain makes it possible for businesses to share data

safely and work together more effectively.

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 Enhance supply chain transparency and traceability.

• Provide end-to-end transparency: By combining data from every supply

chain participant, blockchain offers a single source of truth.

• Monitor performance: By monitoring the performance history of suppliers

and carriers, blockchain can offer trustworthy proof of their performance.

• Confirm provenance: Blockchain provides assurance and safety standards

along with a proof-of-origin for the entire supply chain.

• Increase real-time visibility: Blockchain improve transparency by providing

real-time data on current events and the status of various modes of

transportation.

Ensure security, immutability and authenticity.

• Authenticate data and documents: A secure and encrypted network for

exchanging data and documents, blockchains generate trust minimization by

using encryption to authenticate data, secure the chronological order of records,

and decentralized consensus to validate new entries and maintain them

unchangeable.

• Detect fraud: All participants can see every transaction, and nothing can be

taken away without being noticed. This gets rid of the places where fraud
 happens (e.g., double brokering). shippers can verify authenticity by keeping

track of when each document or transaction was modified (time stamping).

• Prevent theft: Blockchain can contain specific information and rules, such as

those requiring a photo ID for pick-up or delivery, which enhances security.

Reduce process complexity.

• Improve quality assurance: Data can be evaluated and verified by any

organization participating in a transaction. Freight evaluation at the pickup and

delivery locations can help to settle conflicts.

• Increase level of automation: Using "smart contracts," procedures including

payments, ownership transfers, settlement of tariffs, and cargo checks can be

automated. They can carry out the subsequent action specified in the contract,

such as initiating an automatic payment after the verification of the delivery of

the products.

Improve operational efficiencies.

• Improve compliance: Blockchain can be used in conjunction with Electronic

Logging Devices (ELDs) to collect driving data in real time.

• Reduce transaction costs: By confirming each transaction, blockchain helps

to prevent process mistakes and transaction duplication by using consensus

validation.

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• Reduce human error: Blockchain is faster than manual operations and lowers

the possibility of human mistake by promoting process automation.

ii. CASE STUDY - TRADELENS.

An integrated shipping Business called Maersk has been using blockchain

technology to increase supply chain flow transparency around the world. In

December 2018, they created a blockchain-based logistics platform named

"TradeLens" in collaboration with IBM. In December 2018, they launched

"TradeLens," a blockchain-based platform for logistics. Multiple brokers in the

shipping industry contribute to a long value chain by using manual procedures

in their supply chains. By facilitating international trade through the

"TradeLens" platform, which utilizes blockchain technology to enable users to

trade in a "simple, secure, and real-time environment" Maersk expected that its

global supply chain would be more transparent. After 2019, more than 60

network members, including inland and ocean carriers, international ports,

terminals, and custom authorities, employed this platform solution. The

analysis of the trade trends at their terminal in India, reported in the 2019

Maersk sustainability report

(https://www.maersk.com/about/sustainability/our-sustainability-strategy -

accessed on 4 February 2021), revealed that the system's total operating costs

were decreased due to the system's streamlined transaction processes based on

blockchain technology. In Mumbai, for example, implementing blockchain

technology allowed exporters and importers to save expenses by around 15%

of overall costs. Westergaard Kabelmann (2019) points out that the streamlined

exchange system with "secure, immutable digital workflow" across all

stakeholders via the blockchain-based supply chain system has greatly

decreased the average time associated with paperwork (Mumbai transport

study highlights TradeLens value).

Tradelens value in Mumbai transport.

This case study will highlight tradelens' benefits, particularly those related to

supply chain visibility and document flow. QBIS dove further conducted

additional analysis using a recent study from the Global Alliance for Trade

Facilitation (GATF) into the Total Transport and Logistics Costs (TTLC) for

import and export containers transiting through the port of Nhava Sheva,

India's largest port.

With TradeLens, importers using Nhava Sheva might be able to save up to

$220 million annually, and exporters might be able to save up to $40 million.

This is because of lower transport and logistics costs, particularly because of

shorter lead times and fewer delays. If potential savings in other Indian ports

are comparable to those in Nhava Sheva, then overall savings could total $860

million. The TTLC is a methodology that evaluates both direct transport and

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logistics costs, such as trucking fees and terminal handling charges, as well as

frequently ignored indirect transport and logistics costs resulting from delays

(including long lead times and time variability), which translate to higher

detention and demurrage charges, inventory costs, fines for late delivery, and

losses from spoilage and theft of cargo. 80 importers, exporters, forwarding

and clearing agents were interviewed for the TTLC study in India. The port of

Nhava Sheva handles 40% of India's containerized trade, making it a perfect

place to test solutions to problems that affect shippers, carriers, customs

officials, and other supply chain participants globally.

Saving time on import documents.

In contrast to the 35 hours

needed for all of the

study's products and the

three hours needed for

automobile components, it

took importers an average

of 67 hours to obtain,
Figure 1 TTLC benefits from reducing time spent on documentation, prepare, submit, and
Customs assessments, and inspections – Global Alliance for Trade
Facilitation & QBIS
process all import

documents by the authorities for finished consumer goods and machinery.

Through increased effectiveness and promptness in the production and

distribution of shared documents like commercial invoices, bills of lading, and

packing lists that are routinely generated and exchanged between trading

partners, TradeLens could assist supply chain partners in reducing average

times. Furthermore, TradeLens might offer the transparency that enables

importers to spot chances to optimize their supply chain. Import TTLC could

be decreased by up to 2% by reducing the documentation time for finished

consumer goods and machinery to the industry average of 35 hours.

Customs inspection rates are much higher for some imports than others.

Increased direct and indirect costs are a result of high inspection rates. The

study found that, while the average inspection rate for all the products in the

study was around 25%, consumer goods and used machinery, especially those

from China, incur an inspection rate of 100%. TradeLens' secure, immutable

digital workflow, document and transaction authenticity, and enhanced risk-

screening would allow customs authorities to improve inspection targeting and

efficacy without compromising compliance. A reduction of up to 11% in

import TTLC could be achieved if risk-based inspections of consumer goods

and used machinery could help bring inspections to the average of 25%.

Faster, more frequent information could reduce high dwell times.

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When a container is imported, dwell refers to the time it is left unloaded from

the ship and loaded onto a truck or train for transportation to its final

destination. In contrast to the average dwell time of 85 hours for other

containers, the GATF study found that containers on direct port delivery (DPD),

India's program for expedited clearance, had dwell times of 49 hours. Among

others, high storage costs and other expenses were caused by delays in the

information and document exchange between supply chain participants.

Figure 2 Dwell time for NON-DPD CFS import is reduced from 88

hours to the average of 44 hours reducing indirect costs by 10% of
TTLC – Global Alliance for Trade Facilitation & QBIS

TradeLens would enable more accurate and easily accessible Import General

Manifests, quicker Bills of Entry (BE) filing, and quicker BE payment of duties,

all of which could reduce dwell times and the costs associated with them. The

average dwell time for DPD imports is 49 hours; if dwell time were cut from

85 hours to 49 hours, the import TTLC could be reduced by up to 10%.

Some of Nhava Sheva’s export rollings are preventable.

9 percent of export containers at Nhava Sheva fail to board the intended ship

(in business speak, they are "rolled"). Rollings, in particular through shut-out

fees, ground rent at the container freight station, and fines for late deliveries,

contribute to indirect costs. The GATF study discovered that some of Nhava

Sheva's rollings can be attributed to exporters' incomplete information or lack

of contingencies that account for weak supply chain infrastructure. These

mistakes result in reactive management, which adds to the delays, shut-out fees,

and ground rent costs. Up to 23% less export TTLC could be generated if all

rollings and their associated indirect costs were eliminated. TradeLens would

offer a shared, reliable ledger of events that might be used to locate shipments

that are about to roll. Visibility indicators would assist logistics organizations

with preemptive routing adjustments, service concerns, and inventory

management improvements. It's great to see shippers from India, Canada,

Saudi Arabia, and the United Arab Emirates putting TradeLens to the test after

more than two years of arduous effort. These global leaders are utilizing the

advantages of secure digital paperwork flow and trustworthy end-to-end

visibility of cargo movement, and the benefits of reduced procedures and trade

facilitation won't be far behind.

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III. INTERNET OF THINGS.

For the logistics sector, Internet of things is a game-changer. It can establish

machine-to-machine connections in logistics and transportation that allow for

the communication of assets such as vehicles, packages, containers, loading

equipment, and other assets throughout the supply chain. When smart devices

can automatically store that data, humans don't need to manually record

information. The sole objective of the logistics companies was to move a

product from one place to another. However, the industry has been forced to

concentrate more on faster delivery, smart fleet management, warehouse

management, etc. to ensure and deliver flawless customer service and

experience due to the fierce competition and volatile customer demands.

IoT is a great option for these businesses to accomplish the objectives

because smart devices are frequently praised for their precision and accuracy

through real-time data collection. The transformation of logistics companies

is greatly influenced by smart devices, and the increasing number of IoT

implementations across businesses ensures this.

Moreover, A report by IDC points out that IoT spending is expected to

surpass 1 trillion dollars in 2022. This statistic holds true because almost all

companies have started to embrace the power of these technologies,

especially IoT, to achieve success and gain advantages over competitors.

 Managing multiple activities at once is always the challenge for logistics

industry, therefore, embracing advanced technologies like IoT to improve

efficiency and save cost for this complex field. To further clarify the benefits

that IoT brings to, the next analysis will focus on its impact on two main

parts: transportation and warehouse management.

How IoT is used in transportation.

IV. BLOCKCHAIN AND INTERNET OF THINGS: LOGISTICS

FUTURE.

V. CONCLUSION

VI. BIBLIOGRAPHY.

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Advanced Logistics: How High Tech is Moving Our World | I'MNOVATION

(imnovation-hub.com)

Use Cases of Blockchain in Logistics | Knowledgenile

8 Use Cases of AI And Machine Learning in Logistics | Track-POD

Machine Learning and AI in Logistics and Supply Chain | Addepto

22
Uses of Artificial Intelligence and Machine Learning in Logistics - IT Action

Group

What’s the Role of IoT in Logistics & Transportation Industry

(hiddenbrains.co.uk)

How to Use Internet of Things (IoT) in Logistics Industry | Digiteum

Case Study: Cloud - Logistics Company Moves to MS Azure Through CSP

(sayers.com)

How does cloud computing helps logistics business in 2022 ?

(quickmovetech.com)

Technology in the Logistics Industry: Its Role and Importance | Direct Drive

Logistics Worldwide Freight Brokerage