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Transforming the Logistics Industry with Web3 Technology
The logistics industry is hindered by outdated software systems that result in poor data quality. These systems often lack the desired interoperability, standardization, and immutability. Web3 technology promises transactional efficiency, cryptographic security, scalability, transparency, and accessibility, making it a viable successor to legacy systems that are no longer effective.
Challenges in Adoption
Despite its potential, open and decentralized networks, along with token reward systems, have not yet become mainstream in supply chain and logistics. The primary hurdle is the lack of successful incentives for producing high-quality data, which could save the industry billions annually. The focus should be on incentivizing transparent data production and sharing to elevate industry-wide data quality standards.
Industry Resistance
The global transportation and logistics industry, valued at $9.7 trillion, is highly complex with numerous moving parts. Established companies, particularly shippers, freight brokers, and carriers, are often too focused on daily operations to consider overhauling long-standing systems. The perceived high cost of adopting a universal data quality standard further deters them from making changes.
The industry is also highly fragmented, with no universal data standards or best practices. This lack of transparency and trust leads to data hoarding, with no tangible incentives for connecting competitors’ data systems for the industry’s collective benefit. Competition is fierce, and companies are reluctant to make the first move.
Case Study: TradeLens
In 2018, Maersk and IBM launched TradeLens, a web3 shipping solution. Despite onboarding over 300 companies and tracking four billion events, TradeLens was discontinued in 2022 due to a lack of commercial viability. The solution failed to be profitable for its partners, largely because it was a centralized system controlled by Maersk, a competitor to many potential users.
The Promise of DePINs and TIDINs
New web3 technologies offer a promising foundation for logistics solutions. Decentralized physical infrastructure networks (DePINs) combine web3 principles with real-world infrastructure services. They use token incentives to provide hardware or equipment to solve real-world problems.
At HEALE, we propose a form of DePIN that acts as a unified API and tokenized reward system called a Token Incentivized Data Infrastructure Network (TIDIN). TIDINs use existing hardware and incentivize best practices around data, promoting cleaner information. This results in streamlined transactions, shipments, and faster settlements in the logistics world.
Addressing the Data Problem
Inaccurate or missing data costs companies over $600 billion annually. This ‘dirty data’ leads to poor planning, late deliveries, inaccurate inventories, wasted resources, and lost shipments. Mistrust within companies is also common, as seen in payment disputes between shippers, freight brokers, and carriers.
A platform that ensures only high-quality data flows through the supply chain can revolutionize the industry. Web3 technologies, particularly TIDINs, can make producing and sharing better data more profitable. Changing the core game theory in the logistics industry is essential to solving these challenges. The goal is to convince key industry players to adopt a more profitable, predictable, and sustainable system.
Web3 technologies hold the key to transforming the logistics industry by incentivizing better data practices.
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Todd Haselhorst is the CEO of HEALE Labs, a logistics technology firm using decentralization and tokenization technology to reduce errors, fraud, theft, and waste in the logistics industry.
