Headlines made it common knowledge that Blockchain is a panacea. Yet, despite all the publicity, few people understand the implications of this technology.
Transportation professionals are often left wondering: how does Blockchain work and what does it mean for my business?
Let’s dive into what Blockchain means for the trucking industry and why I believe it’s still a decade away from widespread adoption and relevance.
The Basics on Blockchain
Broadly speaking, Blockchain is a technology that allows for a network of independent computers to solve a complex problem for a reward. The reward is a transaction fee (from another user/computer) or a newly minted ‘coin’. The entire process is decentralized, so no one party controls the flow of new coins/fees, improvements to the technology, standards, etc.
Why does computers solving a problem matter? The complexity of the problem mathematically guarantees that everyone can trust their data to complete strangers and know that they aren’t being cheated. Some examples of data you might share in the trucking industry, include: asset location, order status, or warehouse inventory, just to name a few. Blockchain is particularly valuable when you’re working with new, unfamiliar companies in locations with diverse legal structures.
2017 was truly the “Peak of Inflated Expectations” for Blockchain. Every week there was a new ICO raising tens of millions, or a new price record for BitCoin. Unfortunately as everyone who lived through the ‘dotcom’ era remembers, a meteoric rise can’t last forever. In 2018 Blockchain began a swan dive into the “Trough of Disillusionment”.
Don’t get me wrong, I do believe in the value and long-term disruptive nature of Blockchain. It’s just not going to happen as quickly as industry media and consultants with quotas would lead you to believe.
Gartner has a model for the adoption of new technologies called the Gartner Hype Cycle. It illustrates the phases of adoption for new technologies in an industry and society as a whole (see: The Internet, VR). Trucking is traditionally late to adopt new technologies and will most likely adopt Blockchain en masse in the later stages of the “Plateau of Productivity”.
Current Technologies in Trucking Companies are Antiquated
In recent years the two most common technologies found in trucking companies are ELD (Electronic Logging Devices) and TMS (Transportation Management Software). ELDs in the US just went through a massive period of disruption brought on by the federal mandate. However, this push has yet to occur in Canada and is still in development. For many fleets, the adoption of ELD technologies wasn’t a choice, it was only to meet regulations. It’s possible that large retailers could force adoption, but this would take many more years to spread across the industry.
TMS is an even more instructive example. The rate of innovation and disruption in the past decade slowed to a crawl. Most internal systems in trucking are woefully outdated: relying on dusty servers, costing far too much and long forgotten. Desktop applications, rarely adopted are the norm. And yet, without a modern TMS, most companies won’t gain any value from the Blockchain. Blockchain’s power is cross-organization; not within an organization. If you don’t effectively digitize, have open APIs, and the ability to communicate within your organization, then you can’t participate in industry-wide Blockchains. This is to say, to solve the problems within your organization, you don’t need a Blockchain, but rather tried-and-true cloud technologies that disrupted numerous other industries.
What does this have to do with Blockchain? Well, let me turn the question back to you, reader, how can a forward-thinking trucking company integrate into complex and meaningful technology, when the backbone of their business was built before the internet was commonplace?
The Trucking Industry has More Fundamental Problems to Solve
Trucking companies simply have more important and fundamental problems to solve before thinking about employing Blockchain technologies. There is an endless stream of ‘hair on fire’ problems needing urgent attention at any given time, including:
How do I hire and retain drivers?
Where are my trucks?
Are my trucks running at full capacity?
What is my profitability?
Investing in Blockchain requires trucking companies to dedicate very limited resources, including:
These are all in very short supply. Simply put, the juice has to be worth the squeeze. Right now Blockchain does not offer enough promise.
Ask yourself, would you rather invest in driverless trucks that solve most trucking companies’ number one problem, or invest in a nebulous technology with opaque ROI and an immature ecosystem? Most if not all trucking executives would choose the former.
While the merits of driverless trucks are a debate for another time, I use them as a strong example of a conversation happening every day in trucking offices around the world – how do we invest to reduce today’s headaches?
Blockchain technologies are the future, but just like the Palm Pilot was 10 years before the iPhone, you’re better off waiting until the time is right.
Justin Hein is the co-founder and CEO of Rose Rocket, a modern TMS software disrupting the North American trucking space. Hein is a born entrepreneur; at age seven he started his first business manufacturing and selling devil sticks - he even had one employee! Since Hein's early start, building companies has consumed his life. As a self-taught developer, graphic designer, and most recently a Y Combinator alumni, Hein has founded 3 startups in the transportation, technology and financial verticals. All posts by Justin Hein