UPS Looks to Blockchain for Global Logistics Upgrade

Blockchain Delivery

In late 2017, United Parcel Service (UPS) announced that it is diving into blockchain technology to evolve and stay relevant in the age of artificial intelligence. It started working with Blockchain in Trucking Alliance (BiTA), a forum for blockchain technology development and education of freight industry.

Earlier this month, CCN reported that the logistics giant now expects the technology to streamline logistics of package delivery logistics across its worldwide supply chain. The publication highlighted that UPS has applied for a patent that uses distributed ledger technology (DLT) and blockchain to move packages across the global supply chain that may have many carriers, according to documents available on the US Patent & Trademark Office (USPTO) website.

The patent application that was originally filed in February 2018 was entitled “Autonomous Services Selection System.” It says that shipping and logistics industry has become proficient in optimizing package routing to reduce costs and improve efficiency, but it still faces issues with the coordination of logistics of shipments that include multiple logistics service providers.

The patent states, “[T]here may be scenarios in which it is advantageous for various logistics service providers to transport the shipment unit along different legs/segments from its origin to its destination. However, it may be difficult to coordinate the transportation of the shipment unit through the various logistics service provider transportation networks.”

Additionally, the industry also finds it difficult to track if special handling requirements for shipments demanded by customers are being followed by each service provider involved. The application says that certain components, devices, entities, and systems may be communicating with each other directly or indirectly using a wireless or wired network and may collect from one or more blockchains to enable “autonomous matching of a shipment unit to service offers,” as well as tracking various activities and transactions.

UPS truck
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Image credit: Wikimedia Commons

Expanding Capabilities

The Atlanta-based logistics company expects to resolve issues with an autonomous system using blockchain technology to route package via several service provider networks. After scanning the package into a packing facility, the system will automatically choose a route on the basis of service offerings of shipment providers that will be part of the network. The shipments details will be stored in the blockchain ledger as the package will move towards its destination, enabling the system to evaluate performances of service providers in fulfilling their obligations.

The inventor also noted that the system could be developed, in some form, to work with interlocked DLT platform that uses smart contracts for payment of various parties involved in the supply chain after the fulfillment of obligation. If the system is built on a public blockchain platform, it could even use decentralized digital currencies, such as Bitcoin and Ethereum, to manage the payment mechanism.

The recent news is part of UPS efforts, along with the BiTA partnership, to develop the next evolution in its global supply chain network. UPS Director of Enterprise of Architecture and Innovation, Linda Weakland, said last November that she believes blockchain can increase efficiency and transparency among brokers, carriers, consumers, shippers, vendors and other stakeholders in a supply chain network.

The UPS-BiTA alliance is aimed to promote standard development for logistics industry by running a secured blockchain platform. John Larkin, an analyst at Stifel, believes that all those logistics companies that have chosen not to adhere to industry standard protocol set by BiTA are potential losers in this rapidly evolving industry.

Mr. Larkin believes many groups to be partially or totally disrupted by blockchain’s foray into the trucking space, expecting the technology to integrate with truckload pricing futures market and AI-backed real-time load matching. He said that investments of just three logistics giants, UPS, XPO Logistics and C. H. Robinson, will stimulate industry consolidation around these disruptive technologies.

Supporters of blockchain-powered supply chain state that it can accelerate transactions, more securely transport packages, improve transparency and reduce labor costs and errors in the entire process. These traits have made blockchain the next disruptor in the global supply chain.

Ian Haynes
Ian Haynes
Ian Haynes is a staff writer for Block Telegraph. He is focused on covering the latest news from the cryptocurrency world. With years of experience as a financial analyst, covering major stock markets for renowned publications, Ian brings a fresh perspective with unique insights.

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