How Blockchain Technology can Enhance Transparency and Security in US-MX Cross-Border Freight
Graham Perry is a writer at Business Tech Innovations specializing in logistics supply chain optimization. With expertise in fleet management and transportation technology, his articles empower businesses to navigate the dynamic world of logistics with peace of mind.
Despite enabling successful two-way cross-border trades between the US and Mexico, freight transportation continues to face challenges to this day. Given the importance of freight in strengthening trade relations that influence the economies of both nations, efforts must be made to eradicate existing challenges.
In the current climate, blockchain technology can benefit the biggest roadblocks in cross-border trade. Freight industry stakeholders can utilize the decentralized ledger of the logistics blockchain to optimize their operations, reduce costs, and make significant efficiency gains.
The Challenges
Cross-border freight delivery between the US and Mexico is complicated. It involves multiple private and public stakeholders, changing border security protocols, stringent inspection procedures, and complex compliance laws.
Freight also comprises multiple transportation mediums, such as roads, railways, air, and water, which may impact trade laws and the legality of transporting certain cargo. Even the smallest changes in the supply chain in any cargo route can topple operational processes like a house of cards.
Navigating bureaucratic red tape and logistics challenges adds to the problem as they slow down freight movement. It can also be expensive to bear the costs of additional customs duties, border delays, and the loss or theft of cargo.
Currently, the industry suffers from a lack of transparency, trust, and security. It needs a solution that can bring holistic changes not only for efficiency gains but also to improve security.
5 Ways Blockchain Can Simplify Freight Management
The appeal of blockchain in logistics is centered around its decentralized public ledger. This goldmine of data is essentially a distributed public record. It tracks all changes relevant to the logistics industry in real time, making it a high-value asset to stakeholders.
Independent freight forwarders and any other parties involved in freight handling can make use of blockchain technology to derive the following benefits:
1. Data Integrity
In a blockchain, data is stored in individual blocks connected by links. The information blocks are updated in real-time, while the links ensure that no two blocks can be interchanged or tampered with. These links also ensure data security. Because of this, blockchain is naturally tamper-proof and immutable. Each change is also traceable. When applied to the freight industry, blockchain helps maintain the integrity of data, reducing instances of errors and falsification. This ensures transparency, allows secure document tracking, and increases trust among various stakeholders involved in the supply chain.
2. Compliance and Due Diligence
Implementing blockchain technology in logistics enhances the traceability of goods and commodities in transit. If the cargo suffers damage, contains forbidden items, or fails to meet quality checks, it can be traced back to the supplier responsible. Blockchain can help freight forwarders maintain compliance. In cross-border freight transport, the need for traceability cannot be underestimated. It can reduce fraudulent activities and the time taken to acquire customs clearance.
3. Efficiency Gains
Logistics blockchain also delivers operational optimization by preventing administrative mistakes and facilitating seamless payments. Where manual processes are time-consuming, error-prone, and complicated to execute, blockchain solutions like smart contracts offer efficiency gains. Blockchain also helps with seamless and on-time collaboration between suppliers, freight forwarders, and other stakeholders involved in cross-border transportation. From inventory tracking to dispute resolution, the possibilities are endless.
4. Integration with Other Innovative Technology
Blockchain can be integrated with other cutting-edge technologies to further enhance logistics and freight management. For instance, dispatch software can leverage blockchain to improve coordination and efficiency in managing fleet operations. Additionally, communication-based train control (CBTC) systems can benefit from blockchain’s secure and transparent data management to optimize rail logistics and ensure real-time tracking and coordination. When integrated with blockchain logistics, a robust freight management system can help the industry make measurable efficiency and productivity gains. Multiple real-life use cases stand testimony to the effectiveness of blockchain in logistics. Global brands like Ford have already implemented blockchain to trace the origin of auto parts sourced via freight from all over the world. Similarly, global vaccine manufacturer Pfizer has collaborated with Chronicled to streamline its supply chain, improve transparency, and enhance the information security of its products.
5. Compliance Enhancements
One critical aspect of cross-border freight management is adhering to hours of service regulations, such as the 70-hour rule. Blockchain technology can streamline this and other compliance systems by providing a transparent and immutable record of driver hours, ensuring that logs are accurate and tamper-proof. This not only helps in meeting legal requirements but also enhances trust among stakeholders by ensuring that regulatory compliance is consistently maintained. For instance, a blockchain system can automatically track and verify driver hours in real time, reducing the potential for human error and fraud.
What’s Affecting Blockchain Adoption in Cross-Border Freight?
Implementing blockchain in cross-border freight is not easy. First, freight management companies need to find technological support partners who can understand their specific problems and deploy blockchain to drive tangible change. A lack of knowledge about blockchain is a major roadblock to its adoption in the industry, and there will be resistance to the little-known technology.
Remember that blockchain logistics is only as good as the data it contains. So if data is corrupt or of poor quality, it cannot benefit cross-border freight movement. As blockchain evolves, so will its applications in logistics. For stakeholders, finding that sweet spot may require a bit of trial and error. But don’t shy away from implementing cutting-edge technology in cross-border freight management. The revolutionary outcomes are going to be well worth the effort.
