Basic understanding of Blockchain Technology. Give special focus to the application of blockchain in Logistics Management and Supply chain. It covers the following topics Introduction to the blockchain, The current situation in the logistics industry, The Blockchain technology - the paradigm shifter in logistics, Block Chian Technology - Explain technology aspects and features, Basics on Blockchain security, Blockchain capabilities and its advantages to the logistics industry, Value-added to the industry, Implementation challenges, Finally with the conclusion and one best practice with ship chain company.

1. Logistics Management using Block Chain Technology
The logistics industry involves different stake holders like manufacturers, customers,
suppliers, auditors, etc. The blockchain technology offers benefits for everyone in this
chain. Blockchain is a booming technology and for the logistics world a paradigm
shift, it has the power to resolve the most relevant areas of opportunity in the sector,
creating strategic and operational systems that are more transparent, agile, economic,
efficient and effective.
The blockchain technology enable the customers to track the product and trace the
whole chain of product manufacturing. Auditors can easily verify and check any
transactions. Information stored in blockchain is unalterable, it cannot be changed by
any third party, which makes this technology more secure than any existing solution.
Current Situation in Logistic Management
The logistics industry; projected to be worth $15.5 trillion by 2023 and still likely to
grow bigger thereafter. Yes, the transport and logistics industry are huge, but of
course, it’s not without its fair share of challenges. In logistics, many parties are
involved to perform the tasks of transporting raw materials or products to customers.
All transactions in logistics are carried out based on multiple documents to ensure
trustworthiness of the transactions. In global trade, work is done based on standard
trade documents, whereas in face-to-face exchanges, there are usually no trust issues
as the buyer would pay after seeing the product for himself.
Because transactions are solely dependent on documents in global trade, the
risk is often high, as you’re not sure if the other party will send you the products, or
if the importer will make a payment. Plus, in the case of global trade, where documents
guaranteeing the quality of products are required, there is a possibility of these
documents being altered or forged. There is also no way of knowing what tasks or
processes the other party is working on in real-time, unless you make a call or send
an email. The process is still verified manually by sheets of papers; if one paper is
missing, then a whole container, for example, can be delayed and not loaded. The
transport can be delayed for several day.

2. There are many issues nowadays in transport and logistics, like transparency;
where consumers do not know where their products come from. A product can be
inspected by more than 30 organisms while traveling; adding all of this cost a lot of
money. In a nutshell; today’s supply chains are heavy with their own complexity and
broken in more ways than one. The introduction of Block Chain technology in logistic
management creates a trusted environment by making sure that transaction
information on blocks is resistant to forgery or modification. The very things that are
needed for the integrity, reliability and transparency in a supply chain lies in the
blockchain.
Block Chain – the paradigm shifter in Logistic Management.
The new industrial revolution, the industry 4.0, is the answer to a consumer who
demands the availability of products fully customized to their desires, with real time
availability and in competitive costs. To achieve this, innovation and technology are
essential, without this would not be possible. Logistics 4.0 is the necessary
complement to the industry 4.0, and is characterized by applying the same
technologies and applications of the new industry. The logistics industry gives jobs to
more people than any other industry. It grows constantly, and we need to implement
innovative solutions to cope with the growth of the shipping needs.
Block chain is the answer to all the above requirement and acting as catalyst
to achieve the industry 4.0 standard. Blockchain allows companies to use verified
smart contracts that automate the whole buying process, saving time and costs. With
the help of blockchain, companies can make the supply chain more secure and
improve the transaction flow. Each product gets a specific tag, which allows companies
to secure their supply chains with just a few clicks.
A single ledger allows you to store the information on authenticity, origin,
property certificates, place of storage, and records. Thus, all the information that you
need is stored in one place that is easy to access, which makes the supply chain
completely transparent. At the same time, this technology helps decrease the amount
of fraud and cargo theft.
Along with Block Chain technology we are using the power of Internet of
Things, Big Data analysis and Artificial Intelligence for achieving the new industry 4.0
standard in Logistic Management and supply chain. Blockchain is logistic and

3. supply chain are characterized by three key elements: the fact of constituting a
reliable network, an efficient and decentralized notary, the use of intelligent
contracts (Smarts contracts ), which involves the reliable execution of workflow, not
the digitalization of contracts, and finally the ability to use tokens, this concept
allows the realization of micropayments between different platforms through virtual
wallets.
Finally, it is important to mention that according to Morgan Stanley: “The
income opportunity for blockchain within the logistics sector could reach up to $ 500
billion. To put things in perspective, that’s almost double the current market
capitalization of the cryptocurrency in general, which means we’ve barely seen the tip
of the iceberg. Therefore, we can say that the future of blockchain in the world of
logistics is brilliant; we must be prepared to capture the opportunities it generates for
our companies.
Block Chain Technology – a birds eyes view.
Blockchain is a distributed database existing on multiple computers at the same time.
It is constantly growing as new sets of recordings, or 'blocks', are added to it. Each
block contains a timestamp and a link to the previous block, so they actually form a
chain. A blockchain, originally block chain, is a growing list of records, called blocks,
that are linked using cryptography. Each block contains a cryptographic hash of the
previous block, a timestamp, and transaction data (generally represented as a Merkle
tree).
Blockchain is a decentralized ledger of all transactions across a peer-to-peer
network. using this technology, participants can perform transactions without the need
for a central certifying authority. Potential applications include fund transfers, settling
trades, voting and many others.
• Business Networks benefit from connectivity – Connected customers, suppliers,
banks, partners.
• Wealth is generated by the flow of goods and servicesacross business
network.
• Anything that is capableof being owned or controlled to producevalue, is an asset

4. Blockchain is a system comprised of following items.
a. Transactions
As with enterprise transactions today, Blockchain is a historical archive of
decisions and actions taken. Proof of history, provides provenance. Notable
transaction use cases are Transportation, Banking, Manufacturing, Land
Registration, Personal Identification, Food Distribution and Audits,etc.
b. Immutable ledgers
As with existing databases, Blockchain retains data via transactions. The
difference is that once written to the chain, it cannot alter or deleted in normal
way. The alteration requiring rework on all subsequent blocks and consensus
of all nodes in the block. The transaction is, immutable, or indelible. In DBA
terms, Blockchains are Write and Read only. It is like a ledger written in ink, an
error would be resolved with placing another entry only.
c. Decentralized peers
Rather than the centralized “Hub and Spoke” type of network, Blockchain is a
decentralized peer to peer network. Where each NODE has a copy of the ledger.
d. Encryption Process
Standard encryption practices. Some Blockchains allow for “BYOE” (Bring Your
Own Encryption). SHA 256 is the most commonly used Encryption algorithm in
the logistic industry. All blocks are encrypted
e. Consensus Mechanisms
Ensures that the next block in a blockchain is the one and only version of the
truth. Keeps powerful adversaries from derailing the system and successfully
forking the chain. Many Consensus mechanisms, each with pros and cons.
Major consensus mechanisms are proof of Work, Proof of State, Proof of
Elapsed Time, Proof of Activity, Proof of Burn, Proof of Capacity, Proof of
importance.
f. Smart Contracts
Smart codes are derived using Computer code with Ethereum and Hyperledger
technologies. Hyperledger is an open source collaborative effort created to
advance cross-industry blockchain technologies. Business terms embedded in
transactions database and executed with transactions.

5. Blockchain security
Blockchain needs security, the same as any other kind of technology Blockchain
technology utilizes cryptography as a means of ensuring transactions are done safely,
while securing all information and storages of value. Therefore, anyone using
blockchain can have complete confidence that once something is recorded on a
blockchain, it is done so legitimately and in a manner that preserves security.
The blockchain uses the SHA256 algorithm, which produces a 32-byte hash.
SHA-256 is a cryptographic hash function that takes an input of a random size and
produces an output of a fixed size. Hash functions are powerful because they are ‘one-
way’. What this is means is, it is possible for anyone to use a hash function to produce
an output when given an input; however, it is impossible to use the output of the hash
function to reconstruct it’s given input. This powerful feature of the SHA-256 hash
function makes it ideal for application within the Blockchain network.
The Bitcoin Network mainly uses hashes in combination with digital signatures
to protect the integrity of the data owing through the blockchain, using public-key
cryptography. Hashes are furthermore used in the context of the consensus protocol
“Proof-of-Work.”.. Hashing is a cryptographic method of converting any kind of data
into a string of characters. As well as providing security through encryption, hashing
creates a more efficient store of data, as the hash is of a fixed size.
Block Chain Capabilities
o A shared ledger technology allowing any participant in the business
network to see the system of record (ledger).
o Ensuring appropriate visibility; transactions are secure, authenticated
and verifiable.
o Business terms embedded in transaction database & executed with
transactions.
o All parties agree to network verified transaction.
The advantages of blockchain in logistics
In fact, many companies are implementing the revolutionary technology and enjoying
its benefits as we speak. For the most part, blockchain can boost the efficiency and
transparency of supply chains, banish inaccuracies, prevent frauds, and reduce

6. expenses just to name a few. In a nutshell; the very things that are needed for the
integrity, reliability and transparency in a supply chain lies in the blockchain. Because
transaction data on the blocks cannot be altered or forged, the transaction information
is very trustworthy. Also, by adopting smart contracts which can automate
transactions under certain conditions, you can significantly improve the speed of work.
In the logistics sector, where tasks involve a lot of documentation, innovation
is happening with this blockchain technology. In 2016, the Denmark-based shipping
giant Maersk Line carried out a blockchain proof of concept, and the carrier expects a
20 percent reduction in transportation costs if the blockchain is used for shipment of
goods from East Africa to Europe. Blockchain is not just another new technology, it is
expected to play a key role in achieving a steady growth of logistics businesses.
The major applications of blockchain, the revolutionary technology in logistics
are listed below.
Improve Efficiency of the Shipping Process
First off, blockchain technology can transform and improve freight and shipping. Yes,
today’s cargo companies can harness the power of the technology to enhance the
delivery process; both locally and internationally. Essentially, such companies will get
to improve their capacity to track goods and make the process to be as efficient as
can be. Essentially, the system is expected to replace the current logistic process and
reduce the overall expenditure involved in cargo transportation. Fewer errors and
better delivery times are great advantages that are also worth mentioning!
Inventory Tracking
Ever given thought to why inventory tracking receives lots of attention in the business
world? Well, it’s only because most companies spend huge amounts of money on
inventory. Blockchain technology can also help businesses monitor their products in a
highly efficient manner. And even better, they can do it at micro levels. Today, several
leading food retailers have teamed up with IBM to build a blockchain-based system
that supports tracking of food items. Some notable companies in the alliance include
Unilever, Nestle, Walmart and more.

7. Better Transparency
As mentioned earlier, blockchain technology can help improve supply chain
transparency and of course, tackle the issue of integrity and credibility. At this point,
our focus is on the challenge of knowing if the business information is “actually”
trustworthy and reliable. And yes, this is a pretty big issue plaguing today’s supply
chain. Perhaps the biggest advantage of this revolutionary technology for
transparency is that it’ll help build trust between companies. For the most part, B2B
logistics will get to enjoy improved visibility and credibility, both of which are great for
business. What’s more, blockchain systems will minimize invoice disputes, cut auditing
costs and most importantly, prevent the exploitation of workers at ground level. All in
all, provenance is using blockchain systems to make logistics to be as transparent as
can be.
Invoicing and Payments
Yes, this is yet another challenge in today’s logistics industry — in fact, it’s a pretty
big one. Today, many companies find it hard to develop efficient and secure systems
for invoicing and payments. But of course, the good news is, blockchain technology
can provide a solution to the problem. And yes, we’re talking about processing
payments via smart contracts — super efficient, transparent and error-free.
Moving forward, Tally sticks (an international trade solution) has built a
blockchain-based platform that can process invoicing and payments for logistics and
other businesses. As you probably guessed, the platform uses smart contracts to
approve a payment that corresponds to an invoice. It’s also good to mention that the
Global credit card giant Visa has also launched its blockchain-based B2B payments
service. Yes, blockchain is truly the wave of the future!
Settling Disputes
Let’s face it; dispute resolution is one of the biggest challenges in cargo transportation.
Of course, at this point, our core focus is on delayed or misplaced goods. As most of
us know, this problem can take a heavy toll on companies. And most times, they may
actually need to seek external help to iron things out.

8. Well, the good news is, the American multinational courier delivery service
FedEx has implemented a solution that’s geared towards using blockchain to settle
customer disputes. For the most part, FedEx will keep all parties in the know so as to
ensure easier dispute resolution. In essence, the sender and receiver will be aware of
the process before pickup and after delivery. And should any dispute arise, the third
party or better still, independent auditors will no longer be called for resolution.
FedEx’s blockchain-based ledger is enough to fix things!
Value added by blockchain to the business model
Blockchain is an absolute game change. The role of blockchain in logistics will continue
to grow and with it, the efficiency and profitability of the entire industry. Each time,
more companies come together to incorporate blockchain-based technologies. Once a
company understands and recognizes the potential of blockchain technology to
impulse efficiency and value, the next step is to establish a roadmap for the
application, define a use case. This should start with the willingness to collaborate and
involve the construction of blockchain knowledge and skills with a focus on generating
value for all stakeholders.
• Business model based exclusively on blockchain
• Elimination of intermediaries, makes it impossible to outsource services (the
company that accepts the order, carries out the transport)
• Inviolability of information
• Eliminates disputes between the parties involved (shipper, carrier and
consignee), related to waiting times, location, traceability, etc.
Implementation Challenges
Let’s consider an example of a big telecommunication company trying to implement
the blockchain technology. CRM systems collect orders from customers and send them
to a provisioning system. In turn, the latter activates the shipping system. Such a
company will also need a billing system that generates bills after the orders are
completed. These are just a few of the necessary systems, and all of them use
different formats of data as well as different models of data storage. All these systems
are isolated. They are focused only on certain objectives. It will be a huge challenge
for IT to connect all data and implement new technologies. Before a blockchain can

9. be used, it must be re-architected for particular proposes. Organizations need to
clearly define what business operations will be based on blockchain.
The new technology must be integrated into the existing IT ecosystem in order to
address the actual problems of blockchain adoption. Some types of transactional data
are shared with different partner applications, and the same can be done with
blockchain. This approach allows companies to use the existing information in local
databases and take advantage of the new technology at the same time. The existing
data can be moved to the blockchain architecture, being integrated with the existing
systems. Bugs associated with entering the blocks and deduplication mistakes can be
eliminated using the data mapping technology.
Some companies are searching for a solution in hybrid IT integration frameworks.
There is one transferring platform that transfers the electronic data from one end to
another. This method of data transfer is smooth and fast. Special systems of data
mapping on a generic level help eliminate or minimize the disruption on the integration
level. Thus, there is one access layer that allows teams to update systems and add or
remove data using one interface, without affecting other systems. A single access
layer is a solution that allows companies to synchronize the existing technologies with
the blockchain.
Conclusion
The shipping and logistics industry are searching for new technologies in order to
improve the existing processes, cut costs and increase the transparency of the supply
chain. The blockchain technology offers a solution to most current issues. There are
certain challenges associated with the implementation of blockchain, but the more
companies start implementing this technology, the more examples of successful
utilization we will see. There is a number of effective implementation strategies that
are being tested now, and the industry is going to change forever as more
organizations get involved. Blockchain technology might have a significant role in the
improvement of processes in logistics and, consequently, in mitigating these issues.
This will be especially apparent with further implementation of blockchain technology
in creation of smart contracts. Such type of contracts could digitize commercial
services and improve underlying business processes.

10. In the future, blockchain is expected to bring about a paradigm shift in logistics.
It will make the transaction verification process more efficient, and help achieve a
quick delivery of goods and services through mutual trust among participants. This
process may take several years to be implanted in logistics.
Apart from logistics, the following industry sectors are using block chain
technology as a tool to give innovative impetus for attaining their business goals in
smart way. The some of the sectors, which are using block chain are as follows.
1. Payment processing and money transfers
2. Monitor supply chains
3. Retail loyalty rewards programs
4. Digital IDs
5. Data sharing
6. Copyright and royalty protection
7. Digital voting
8. Real estate, land, and auto title transfers
9. Food safety
10. Immutable data backup
11. Tax regulation and compliance
12. Workers' rights
13. Medical recordkeeping
14. Weapons tracking
15. Wills or inheritances
16. Equity trading
17. Managing Internet of Things networks
18. Expediting energy futures trading and compliance
19. Securing access to belongings
20. Tracking prescription drugs
One best practise case is that, ShipChain is a company that has envisaged a
system based on blockchain to track goods from the moment they leave the factory
until delivery to final destination (customer). Process automation is based on digital
currency (so-called “SHIP tokens”). Stakeholders of the ShipChain platform purchase
tokens to pay for the cargo and transactions executed using ShipChain platform. This

11. business model enables data and transaction permanence and facilitates. Information
sharing, thus elevating platform transparency to the highest possible level.
References
1.Wikipedia
2. Various articles published in Internet.
3. Various SlideShare documents.