For the longest time, theft and fraud have been considered something that’s inevitable for the shipping industry. With so many moving parts dealing with massive volume, it’s no wonder that people have a tough time combating fraud and theft, as these are relatively easy to go under the radar. One of the goals we look to accomplish at Fr8 is to make the logistics industry have an extensive network built on trust and transparency. Here’s how:

The Point of Origin

Perhaps the most notable issue with shipping and fraud theft is how bad actors operate along the supply chain. While a heavily regulated industry, it’s size lends itself to certain items going missing or stolen quite frequently. In fact, according to Transport Topics, $114 million was lost in cargo theft in the US alone in 2016, which could be greatly reduced by the blockchain. However, first, it needs to be proven via attacking the right part of the supply-chain.

According to the article above, the biggest places cargo theft occurs are in the ports of Humboldt Bay Harbor District, Port of Hueneme, and Port of Long Beach. The correlation between theft and the size of those ports makes sense; however, it’s the process of theft that needs to be addressed, which includes how thieves will either replace the weight or count something as missing or damaged. As stealing items out of a cargo container (or even stealing the container outright) require a few different people to agree to do it, the issue starts with the point of origin, which is where blockchain comes into play.

Not only will the blockchain provide a proof-of-receipt on where the cargo came from, what it’s weight was, and what was purchased for, but additionally, who along the chain was responsible for the item. This not only makes it easier to pinpoint bad actors but also shows potential customers which shipping companies are the most trustworthy and best to work with. While this innovation could potentially drive prices down on freight across the board (more on this later), the second half of the supply chain is on a local level, which blockchain could play a significant role with as well.

On A Local Level

Another important part of combating theft and fraud in the shipping supply chain is what can be prevented on the local side. According to Fast Company, approximately 11 million packages were stolen in 2016 and while there’s very little we can do about theft from your front doorstep, the blockchain can help up to 90 percent of that. Although, this relies on streamlining many current services, which have already proven inaccuracies.

Having an item shipped to you can seem like a transparent process, but in fact, is usually missing some steps in verification. A quick fix to the current method would be to have everyone require a signature for delivery, but that’d make things slow and eventually unnecessary. Yet, with blockchain, the last mile of shipping could become much more transparent, giving you the best rate and numbers from the start, allowing you to pick which company delivers your package. Although this is relatively down the road, the concept falls in line with what Fr8 is trying to accomplish across the board: making shipping more streamlined and transparent.

A Transparent Bidding Process

Finally, as we’re looking to capture large-scale shipping and cargo providers, the biggest aspect that the blockchain will help combat fraud with is the transparent bidding process. As the current brokerage system is largely based on word-of-mouth and reputation, there are very little avenues for someone to check if the price they’re getting is fair. This allows some brokers to play favorites or work around the system, creating an atmosphere that lends itself to unfair pricing models, which the blockchain could fix.

Where the blockchain helps the bidding process is by making a platform for shipping companies to connect with distributors in a more streamlined fashion and by creating an atmosphere that drives down price. Without brokers to play favorites, the bidding process is open to anyone, with the reputation for getting cargo somewhere in-tact and on-time being rewarded. This encourages people to act in good faith to keep acquiring more business, reducing the desire to steal (while potentially getting them paid more in the long-run). All-in-all, as we’re excited to bring blockchain to the freight industry, it’s only the beginning in regards to how much of a financial impact this network could have.

What impact do you see blockchain having on shipping theft and fraud? Comment with your answers below!