Issue: Today, a supplier/3PL estimates the cost of transportation. This is followed by the carrier completing the service at which point they send the invoice with actual cost to supplier/3PL. This invoice is then reviewed, approved, and settled. This review process is often quite lengthy and could be avoided.
With the aid of emerging technologies: Imagine using a blockchain technology like Ethereum. The smart-contracts inherent in Ethereum can digitally validate the milestones and trigger payments. Proof of delivery is an important milestone in shipment execution. One can imagine setting up Ethereum to digitally validate the proof of delivery and even make payments right away, thereby eliminating the need for carriers to send invoices and then wait for months to get paid. Of course this is only the basic golden transaction. There could be additional charges that the carrier would have incurred which may not have been part of the original contract. This can always be rectified with an ad-hoc invoice from the carrier.
All the carriers could save their contracts in the blockchain itself. The supplier/3PL can get a visibility of available contracts once the shipment is planned based on the route of the shipment. The blockchain automatically triggers tenders to the best carrier and if the carrier accepts, sends it back to the supplier/3PL for approval. If rejected, blockchain iteratively awards the tender to the next best carrier. This process repeats until the tender is accepted by both parties and shipment execution begins.
Once the carrier picks up the goods, the blockchain triggers 25% payment to the carrier as configured in the milestones. Ethereum smart contracts can come handy here. The data feed itself could be received from smart locking IoT devices installed on the truck's doors. When the supplier/3PL planner overseeing the loading process locks the truck's door with the smart lock IoT device, it prompts him for an identification. If he chooses to identify himself via the fingerprint scanner on the lock, it sends the data to blockchain. The smart contracts on the blockchain listening to the milestones oblige with the necessary advance payment which is sent to the carrier's wallet address. But this transaction stays in "pending" status. The subsequent milestones also trigger advance payments and all of them land in the carrier's wallet address with the "pending" status. Only the final proof of delivery milestone validates the advance payments and sets the status to "validated and paid."
The final proof of delivery also relies on the smart lock IoT device in case of large FTL shipments. For smaller parcel shipments, this process has to be reimagined with the familiar old-fashioned signature on a mobile screen...
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- Kranthi Askani