We’re sorry, your package was lost in transit.

Ah, back on WordPress. I hope you all found my presentation last week slightly interesting. I’d settle for mildly entertaining, even. Anyway, I owed you guys a follow-up blog from it, so here goes nothing:

When I started writing this, I planned to cover a bunch of emerging technologies all at once – but much like my presentation, it was beginning to feel too crammed with information. This time, I have the luxury of breaking it up, so I think I will.

Let’s start with Blockchain, which should be timely, considering we’re all experts in it after our class last week. There are a couple principles of blockchain that can revolutionize the security and transparency of moving goods all across the globe:

Immutable Ledger

This is the lowest hanging fruit/concept from blockchain that could and should be applied to solve a real-world transportation issue, and is also the namesake of this blog. As I discussed in class, so many of the problems in this industry are rooted in poor transparency, visibility, and as a result, security. According to BI, as of 2019, an estimated 15% of all packages didn’t reach their final destination in major cities due to theft, loss, delay, or other logistics issues. I have to imagine as volumes have grown and capacity hasn’t, that this number has only gotten worse. So where does blockchain come in? Let’s look at an example:

Let’s say I want to order the jersey of my favorite childhood basketball player, Allen Iverson (of below fame).

I hop on to Alibaba, and order the jersey from a manufacturer in China, with delivery scheduled for 2 weeks from today, due to supply chain and manufacturing concerns.  13 days later, I realize the package should be here soon, and I open my mobile app to track it. There’s no update. Days come and go, and still nothing. In fact, it doesn’t really seem like anybody knows where it is. After 3 weeks I call up the company and ask where the jersey is. They tell me to hold tight, it still might be on the way. After a month of not receiving the package, I call again, and the company tells me it is safe to say the package either got stuck at customs, or lost.

Now, let’s see that scenario with a transparent, immutable ledger being deployed: This chart from BitNautic, a maritime freight company, should help.

This isn’t the simplest diagram in the world, but of the tens of diagrams I saw, I liked it because it basically shows all of the parties involved in getting my jersey to me, and divulges enough complexity that you could imagine what it would look like doing this all by pen and paper, as much is done today.  It shows the ability to communicate requests, verify information, and ensure all of that information is accessible to the correct parties.

From a last mile perspective, this chart from Nextpakk shows at a basic level how to get the product from order to my door, all being done on their blockchain, such that I and the seller could see where the package was at all points in its journey.

The importance of blockchain here is two-fold: by timestamping and securing all that info cryptographically on a ledger that everyone has access to, you can significantly reduce or eliminate the entry points along that journey where fraud or counterfeit goods could be introduced – as was probably the case with the Allen Iverson jersey I ordered that got stuck at customs. Secondly, you eradicate the problem of losing track of a package or its status, because it’s always clearly visible on the blockchain.

“We believe it’s going to take a global village to build this; We think the future of this is open source and we think once that’s built out, all kinds of people will be able to add value on top of that,”

Dale Chrystie, FedEx Exec, BiTA  Board Member

You might be thinking that this sounds a lot like what already happens today. Well, per a FedEx whitepaper, “Currently technology can, of course, track your package and store transaction data. The difference is that with blockchain every player in the scenario would have access to the same digital records. That’s you, the manufacturer, the FedEx ground and air services, the delivery driver and so forth. Not everyone needs, or will be given, all the data in the blockchain — only the parts they need — but the blockchain ledger acts as a single source of truth for all data pertaining to this transaction”

This ‘single source of truth’ is a major step away from the complex and tedious paperwork-heavy (often hundreds of touchpoints and documents for an international shipment) processes for large carriers. They know this, and they know it will be good for them, so in fact, they have created a group called BiTA: The Blockchain in Transportation Alliance. The group includes heavy hitters like FedEx, UPS and J.B. Hunt, and interesting partners like Delta and Salesforce, who all have a goal of driving adoption of this kind of tech.

Smart Contracts

Smart contracts can facilitate many micro-transactions that occur in a parcel delivery. I like the example of paying for guaranteed deliveries.

Today, companies like FedEx and UPS offer many different “guaranteed delivery times” like next day by 11am, 2 day shipping, etc. But especially as we’ve seen with volume increases, the pandemic, inclement weather, these promises are not always met, and shipping companies often ask customers just to be understanding of a delay. I read a story about a guy in Louisiana who paid FedEx $55 to ship a medicine overnight to someone in New York. After 2 weeks, they still hadn’t delivered the package, and refused to issue a refund. Why should he have to pay full overnight price?

Smart Contracts solve this problem. Payment can be automatically be exchanged if the conditions of the agreement are met, such as the package being delivered in the agreed upon time, in good condition, as verified by all parties on the blockchain. This way, you avoid having to file a claim, get a refund from a credit card company, and many other time consuming steps.

This also prevents payment issues for products that never get delivered at all, like my Allen Iverson jersey above.  

Further Reading

Aside from BiTA, Nextpakk and BitNautic who I’ve mentioned, there are tons of companies doing cool stuff with this.

Amazon (obviously) is working on this

Maersk & IBM have a partnership

TradeLens has an easy to follow website and solution

A great list of 10 benefits to blockchain in parcel delivery

15 comments

  1. Great post! It is fascinating to learn how companies can use blockchain to improve deliveries, especially those coming from overseas (hello Alibaba!). I also find the concept of having a contract between parties very intriguing; I think it would be beneficial to have the expected compensation back immediately when a party doesn’t meet the promise of delivery.

  2. I had no idea how egregious the shipping agreements were from Fedex, UPS, etc. Given that these companies can get away with not being held accountable to customers that do pay for expedited service, do you really think they are open to adopting smart contracts and immutable ledgers? To me, they obviously benefit from the flexibility that an inefficient system provides them.

    1. Good point, of course when they are the big dogs and only show in town, they benefit from not being held super accountable. I think one thing thats changing in the industry is competition, namely from Amazon, but other third parties are grabbing marketshare too. Soon customer service will be a major differentiator to attract shippers, and what customer wouldn’t want to ensure their packages will be on time (think Domino’s 30 minute delivery or the pizza is free)? But you’re right, I think the attractiveness for these companies comes more in the smooth international shipment, with things around speeding up customs clearance top of the list.

      1. Interestingly, Domino’s 30 minute delivery of the pizza is free campaign back-fired as their legal fees grew exuberant when they were found liable for the torts that resulted from incentivizing their employees to drive negligently in the course of business. See https://www.chicagotribune.com/news/ct-xpm-1993-12-22-9312220035-story.html

        I don’t think the need for speedy deliveries is a risk at least the big dogs will take on.

    2. I’m a bit confused about these smart contracts anyway. Most any receipt is a contract, and these companies aren’t going to sign something that they don’t want to sign. At present, I imagine the receipts function like this smart contract argument: $55 in exchange for overnight shipping *turn over receipt* [legal mumbo jumbo] …notwithstanding the foregoing, FedEx shall not be held liable for any late packages unless caused by its own willful negligence. Customer uses this service at its own risk… etc.

      The way you’d want the smart contracts to work is that the money for the service would be held in escrow and only released upon satisfaction of the deal. While that sounds cool, I doubt the legal and other fees required to set up these temporary trusts would be all that popular. Plus, any young company willing to take this on, likely couldn’t since they’d likely need the capital up front to be able to execute the deliveries.

      1. Thanks for the replies and for bringing the legal ramifications of the Dominos delivery guarantee to my attention, didn’t know that! Great to have a legal perspective on contracts as well. Basically, smart contracts sort of eliminate the need for escrow, it would be more like the customer still has their money in their own digital wallet until confirmation that the carrier upholds their end of the smart contract, and then the payment automatically executes, hence the self-executing nature that cuts out the need for a third party to enforce. Does that make sense?

      2. @barrinja1 – I’m unable to reply to your comment, so I’m relying to lexgetdigital’s. The question I have is the aspect of the “carrier upholds their end of the smart contract, and then the payment automatically executes” — Wouldn’t this require some type of manual oversight or intervention? In the case of the medicine shipment, had FedEx been able to ship their product within the 1 day turnaround, they would have needed to submit some type of documentation supporting their case; and on the other hand, the consumer would need to point to the delivery receipt to keep the money in their wallet. Maybe its simpler than that, but I can’t seem to conceptualize it of how it would improve the system. If anything this adds more power to the consumer, but I imagine this could provide more harm than good for companies like FedEx, and therefore, there would be no incentive to actually see this be implemented.

      3. @dropitlikeithox i think with sensors in theory you could avoid the manual oversight piece, it would simply be like a geolocation tracker in the truck and package which demonstrates delivery, resulting in automatic execution of the payment. I do think you’re right, FedEx wouldn’t really be incentivized to use smart contracts in this way, perhaps a better use of smart contracts would be between FedEx and their ocean cargo shippers, to ensure compliance on both sides

  3. Thanks for this follow-up blog from your presentation! I wonder how blockchain may be implemented in developing nations. What kind of infrastructure (beyond the physical logistics infrastructure like hubs, warehouses, etc) is required for blockchain to take hold and then provide value? I imagine that the current logistics infrastructure of FedEx within the U.S. is established and might be difficult to radically change. Implementing blockchain may not need a substantial restructuring of the whole system, but may require certain elements for it to work. My question: would implementing blockchain tech in developing countries’ infrastructure be straightforward?

    1. Interesting point, I wonder how much time FedEx/UPS truly spend thinking about their developing nation book of business anyway. Oftentimes manufactured goods originate in places like this, so I think the key to blockchain implementation for use cases like these is the sensors that much be connected to packages from the point of manufacturing, such that we can track it around the world to our doorstep. If they can bring the tech to a reasonable cost, could the only infrastructure spend be adding those sensors?

  4. Yay Allen Iverson – Hoya Saxa!!

    It’s interesting to see the complexity of the seemingly simple transactions, as well as all of the players/touch points involved, in your diagrams and realize how much room to grow there still is. I was reminded of the MIT article from last week that highlighted Maersk’s establishment of “TradeLens” – it seems like the shipping/port section of the supply chain is trying to embrace blockchain for efficiency; do you think there’s a disconnect between them and the carriers like UPS/FedEx et al?

    1. Thanks for the comment! Often, these true logistics companies like Maersk may have to work with FedEx/UPS for some portion of the journey, so I think a blockchain implementation solution would have to cross both companies. In theory, someone like Maersk could use blockchain on their own for a specific use case like customs clearance, and then once the package is passed on to a warehouser or last-mile carrier, they don’t care what happens to it. I think it’s to the benefit of all parties to work together on it, hence the BiTA creation!

  5. I think the only part that’s missing is the final landing place for all of the missing packages! USPS will auction off the packages to other businesses through something called GovDeals. This is something that has come up on TikTok, where people will go through and they can purchase unopened packages for $5, and this serves as an additional revenue source for those businesses. A few people have gone viral for this, but honestly it seems like a good deal for those willing to take the risk!

    1. Woah, that’s wild! talk about unethical….

  6. Nice expansion on topics from last week.

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