A Digital Transformation in International Transport and Logistics: Blockchain

A Digital Transformation in International Transport and Logistics: Blockchain

Birsen Koldemir (Istanbul University Cerrahpasa, Turkey)
DOI: 10.4018/978-1-7998-1397-2.ch023

Abstract

Firms must deal with the factors that increase performance, which support the delivery of the produced goods at minimal cost and time. In this respect, the advantages of digitization have been studied. The path to international trade in its quest to reduce logistics and supply chain costs cross with Blockchain technology. Blockchain technology isn't only an inter-user money transfer technology, but it also includes all the trade supply chain actors. Thus, a visible “supply chain network” that's directed by blockchain, which holds the record in real time and doesn't change pursuant to the sequence occurs. All actors on the network can access and track the flow and distribution of the transaction across borders. How does blockchain technology improve yield and reduce costs? To find the answer, the application areas of digital technology in trade have been investigated. In international trade, a transaction draft was created and the advantages and disadvantages of blockchain were exposed.
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Introduction

By transportation, we understand transferring cargo and passengers from one place to another in order to achieve certain benefits. The one who provides the transfer and change of place of existing cargo and passengers across time and space using all types of means of transportation provides a technical service. Means of transportation are adjusted according to supply and demand. Transportation systems offer their services using various means of transportation depending on technological advancements.

The choice of a particular transportation system by a state depends on the said state’s resources, technological infrastructure and developments to be used. While choosing the right one it is necessary to approach the effectiveness of transportation systems as a multidimensional matter. By choosing the most effective and innovative system regarding our needs, a transportation service compatible with other systems should be provided (Janiç, 2017).

For centuries one or a few transportation systems were at times more utilised or demanded. The reason behind that is the ease provided by transportation systems to the users. On the other hand, the system in demand shows changes and development influenced by technological developments in provided services, state politics, the structure of population and society, type of energy in use, environment, economic developments and financial resources. Figure 1 shows the change factors of transport systems. Even if seemingly independent, these factors affect one another (Rodrigue et al., 2013). Respectively, international trade changing due to technological and economic developments is prominent among the new factors, which emphasise the effects of the aforementioned ones in recent years.

Figure 1.

The factors affecting changes in transportation systems. (Adapted from Rodrigue et al., 2013).

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The Council of Supply Chain Management Professionals (CSCMP) defines logistics management as “that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements” (CSCMP, 2013). Logistics involves the whole of actions of planning, control and management of the stream of goods, services, and capital in which systems of control, communication, and information increasingly needed by the business world play a role. Thereby, logistics gathers together technology, production, service, and transportation. The basic difference between transportation and logistics lies in the fact that while transportation is responsible for transport itself, logistics involves the supply, planning, and cargo of goods which include transportation.

Transportation has quickly brought countries together by shrinking the world with the use of technological advancements in the fields of information, microelectronics, and communication. Especially thanks to developments in information and communication technologies, transportation and communication costs have dropped. Natural barriers such as time and space which separated countries, people, and markets have largely disappeared (Artan & Kalaycı 2009; Kalaycı 2013).

International transportation and logistics provide development through international trade, production, and sales. Countries aim at selling their products abroad in order for them to gain more worth. Companies obtain a chance of selling their products for a higher price and buying cheaper goods from foreign markets by engaging in international trade. Thus, enterprises grow due to the difference in price between the product they sell and the product they buy and as a result, the national economy grows as well.

The process of global trade represents the removal by states of barriers to foreign commerce put before the stream of goods and rendering the world one market (Sabır, 2013&Kazgan, 1997). The most important factor affecting the competitiveness of a product on the international market is its cost. It is necessary for companies to assess all possibilities of decreasing product costs without compromising the quality. The price should be at a level allowing competition with other companies (Doğan, 2003).

Key Terms in this Chapter

Transport: A service that allows freight and passengers to move from one point to another for a purpose. The service must be serviced in the most economical way because a displacement is performed for providing benefits. Transport vehicles and transport systems vary according to the goods and services to be delivered. The expectation of transportation demand is to serve the minimum cost in maximum speed and safety.

Digital Conversion: A process of renewal and change is applied as a whole in technology, business processes and lifestyle by digitizing existing information.

Blockchain 2.0: Using smart contracts, it can perform all transactions in the Financial Field such as starting work, making compliance checks, closing the transaction, verifying and controlling the parties.

Blockchain Supply Chain Network: It is a technology to monitor and approve the processes of participants in its own ecosystem (if the trade is international; customs procedures are included.) in real time, including the flow and distribution of goods.

Blockchain: It is a general account system that records and data related to transactions carried out over computer networks and which is recorded by taking into consideration the transaction sequence. This account system is open bookable because it is accessible to everyone on the network. It is a technology with internal access in blocks that cannot be changed by connecting encrypted data to the chain's rings. The process in this system, which has a time sequence, cannot be changed retrospectively. Because operations are stored in blocks connected to each other, a history-oriented operation cannot be deleted. All operations can be accessed and controlled when requested. This technology performs the processing sequence based on programmed contracts (smart contracts). With smart contract, many processes are automated, making complex and long-lasting processes easier to manage. First, it worked only with software and programmable protocols to transfer digital money. The current situation has improved rapidly with Blockchain 1.0, Blockchain 2.0 and Blockchain 3.0 for different purposes.

Blockchain 1.0: Includes digital money transfer.

Supply Chain: includes the management of the supply and demand of the product, the supply of raw materials, production and assembly, storage, inventory management, order management and distribution of products to customers. The supply chain includes all the products and services from the supplier to the customer at the latest stage and all the activities, human resources, technology, company structures and resources that take place in this path.

Logistics: It is the service of planning, implementing and supervising all kinds of products, services and information flow from the exit point to the destination in an efficient and productive way to meet the needs of the people. The productivity in logistics service depends on the right product reaching the right customer at the right amount, in the right conditions, at the right place, at the right time, at the right cost.

Blockchain 3.0: In addition to all transactions, all kinds of document verification procedures, supply chain, import export, financing, insurance and customs procedures can be carried out by expanding the transaction limits to be unpredictable.

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