Application of Blockchain in Vietnames logistics

APPLICATION OF BLOCKCHAIN TECHNOLOGY IN VIETNAM’S LOGISTICS Nguyễn Diệu Linh – CQ58/22.05CL nguyendieulinh29502@gmail.com Bùi Anh Thái – CQ59/06.05CL Logistics is considered a lucrative sector, but many logistics companies have missed a significant proportion of profits because of unnecessary expenses, inefficient practices as well as cyber-attacks Stolen, misshipped, and mislabeled cargo alone accounts for approximately $50 billion in annual losses This, therefore, poses a challenge for such owners to find ways to improve the situation Fortunately, Blockchain Technology can be a game-changer It has distributed ledger which will help the related parties meet the demand quicker and more convenient delivery of a wider variety of commodities, and so on This article discusses both the great influence and challenges of Blockchain on logistics and recommends some solutions to make use of Blockchain’s advantages in Vietnamese logistics sector Key word: Blockchain, Vietnam’s logistics Overview of Blockchain technology 1.1 What is Blockchain? Blockchain is a type of shared database that differs from a typical database in the way that it stores information As new data comes in, it is entered into a fresh block Once the block is filled with data, it is chained onto the previous block, which makes the data chained together in chronological order Different types of information can be stored on a blockchain, but the most common use so far has been as a ledger for transactions Moreover, decentralized blockchains are immutable, which means that the data entered is irreversible This means that transactions are permanently recorded and viewable to anyone The entire community can verify the record’s authenticity using the blockchain, instead of a single centralized authority These features of this technology, which is known as the fundamental foundation of cryptocurrency, now is believed to play a crucial role in the development of the logistics sector 1.2 How does Blockchain work? The goal of Blockchain is to allow digital information to be recorded and distributed, but not edited In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed This part will show you basic operation of Blockchain When each transaction occures, it is recorded as a “block” of data Those transactions show the movement of an asset that can be tangible or intangible The date block can record the information of your choice: who, what, when, where, how much and even the condition — such as the temperature of a food shipment… Each block is connected to the ones before and after it These blocks form a chain of data as an asset moves from place to place or ownership changes hands The blocks confirm the exact time and sequence of transactions, and the blocks link securely together to prevent any block from being altered or a block being inserted between two existing blocks Transactions are blocked together in an irreversible chain: a blockchain Each additional block strengthens the verification of the previous block and hence the entire blockchain This renders the blockchain tamper-evident, delivering the key strength of immutability This removes the possibility of tampering by a malicious actor — and builds a ledger of transactions you and other network members can trust Benefits of application of Blockchain in Logistics Applying Blockchain Technology in Logistics has brought us a wide range of advantages First and foremost, implementing Blockchain in logistics offers realtime tracking and inventory management As a consequence of involving an enormous number of related parties as well as goods and commodities, visibility is considered one of the biggest challenges in the logistics industry Traditionally, visibility was only provided to two parties of a specific transaction Therefore, a wholesale operator had difficulty knowing whether their materials had been shipped to the manufacturers or when the final products would be delivered because of the disruption of data flow when goods pass from one party to another through different management systems Additionally, to keep track of any data, every party has to access many different platforms, which is no doubt both time-consuming and costly to maintain Luckily, blockchain technology is an effective solution to this problem, which can provide end-to-end visibility With the chronological order of data, blockchain makes allowances to record every step of the order fulfillment or delivery process Such information can be shared with everyone in the network It implies that real-time tracking is possible, and all participants can stay up-to-date with the transaction status at any time and anywhere Second of all, the application of Blockchain in Logistics cut down the administration cost and prevents counterfeit products There is no doubt that physical paperwork tends to be costly, and hard to track but easy to lose, which sometimes even causes huge slowdowns in transportation and delivery as information is not readily available However, adopting Blockchain in Logistics, its decentralized characteristic allows all information and data, like consignment notes, lists, and waybills, to be distributed so that all participants involved in the network can easily get access to it According to research, the price for processing and administration was roughly 20% of transportation’s overall costs because of over-reliance on paper transactions Nevertheless, since the application day of blockchain networks, such logistics companies can save up to $500 billion each year For instance, Alibaba and Amazon, two large retailers, have already integrated with blockchain to make their cross-border operations more efficient Another benefit is that Blockchain smart contracts allow automated and transparent transactions As a characteristic of the logistics sector, the majority of global trade businesses would utilize phones or e-mails instead of involving face-to-face contact Therefore, the trust issue is a problem that calls for a suitable solution If your business has a long-term relationship with a trading partner, the risk of refusal of the cargo handover, nonpayment, or fake documents and information can be low By contrast, in case you form a new relationship with another organization that you have never worked with before, trust is a major and valid issue And in such circumstances, two parties always relied on a mediator to lower risks However, with smart contracts, agreements can be automatically validated, signed, and enforced as long as some specific conditions embedded in the code are met, which declines the need for intermediaries, and as a result, saves time and brokerage commission for Logistics companies Applying Blockchain technology in Logistic in Vietnam 3.1 Current status of Vietnam’s logistics industry Talking about the situation of the logistics industry in Vietnam, Mr Nguyen Tho Toan, a representative of Thai Son technology development company said that the main cost comes from the waste of business in money, time, and risk for staff to deliver and receive goods, to procedures at the office of shipping lines, forwarding agents and physical movement of large volumes of papers Currently, the logistics costs in Vietnam are still high, accounting for 16,8% of business costs, higher than the average Asia-Pacific region of 12,5% Furthermore, in the composition of logistics costs, transportation accounts for 50% Therefore, it is crucial to cut the logistics cost, especially the cost of transportation by reducing traffic jams, reducing overload, and reducing the amount of paper at the ports, The infrastructure of logistics is still poor, and Vietnam’s logistics cost is among the most expensive in the world This high cost is due to the fact that Vietnamese logistics enterprises are still limited in terms of business size and capital, experience, management qualification, and ability to apply information technology The export and import industry is not fully connected Besides, businesses face lots of difficulties because of a lack of infrastructure connecting port areas with areas where goods are concentrated, lack of dedicated freight forwarding and service centers At present, Vietnamese importers and exporters prefer the form of importing and exporting goods, which is buying Costs, Insurances and Freights (CIF) and selling at Free on Board Since then, foreign partners have to take charge of transportation This is also a disadvantage of our logistics industry 3.2 Solution to enhance the role of blockchain technology in Vietnamese’s logistics industry In order to reduce those existing restrictions of the logistic sector in Vietnam, Blockchain technology is an excellent measure to play its role in developing Vietnam's supply management at present and in the future so it’s about time we proposed solutions to enhance its role First of all, since this is a new technology, people would have some mistaken thoughts about its characteristics and its benefits It’s important to raise awareness of blockchain technology to businesses and communities and create a collaborative society With the rapid development of era 4.0, blockchain systems will appear more and more As a result, each business will want to build its own systems, aiming to improve market share and profitability, which might lead to a lack of unity among individual blockchain chains The understanding of the relationship between their business value and the technical feasibility of blockchain is crucial Once businesses can understand the benefits that blockchain brings to work together, these parties can promote the effectiveness of blockchain Besides, although the cooperation between the competitors seems uncommon and confusing when they have a collective effort to set up a common blockchain platform, it will create more value for businesses to improve their solid foundation knowledge of blockchain From that, businesses can gain more and more value from this new technology Next, preparation in terms of technology and infrastructure for logistic businesses plays an essential role in enhancing blockchain technology, starting with automating processes and digitizing data In addition, improving the capacity of connecting infrastructure is also a possible solution The more processing speed in the blockchain system is improved, the more the efficiency of work will be increased Logistics is a sector with many stages, so delays in the network and connection of businesses make it more time-consuming and costly for businesses What is more so as to boost the competitiveness of Vietnam’s logistic industry before the risk of being left far behind from the global economy, cutting costs is the priority And upgrading the infrastructure is a promising solution for businesses If the infrastructure is not guaranteed, the processes will be prolonged which ends up in the consequences of rebound Last but not least, while being applied by many great businesses in the world, blockchain in Vietnam is still a new field that needs support from the government and states There are no policies and procedures for businesses that want to be at the forefront of this field The interest, research, and long-term investment of the state are driving factors for promoting blockchain’s strength Specifically, it’s vital that the government pays attention to reducing procedures, putting them on the blockchain system so as to help businesses save time and money, and constructing freight forwarding and service centers That will a favor for businesses the burden of procedures and costs In short, with the rapid development of science and technology, the era of blockchain has come, which has significant impacts on all aspects of our life Particularly, in the logistics field, blockchain will enter more and more deeply, which allows all participants to stay up to date with the transaction status at any time, anywhere; lowers the administration cost, put a stop to counterfeit products; and permits automated and transparent transactions… However, the current status of implementing blockchain in Vietnam’s logistics still has some problems such as poor infrastructure, mistaken thoughts of businesses and communities about blockchain, etc Thus, to take advantage of the new technology in the logistics sector, the government should enact appropriate policies to support businesses Moreover, it’s also necessary to raise awareness of both businesses and communities about blockchain; and upgrade technology and infrastructure to ensure no delays among logistics stages References: https://www.vietnamplus.vn/nhung-rao-can-trong-ung-dung-blockchaintai-viet-nam/778488.vnp https://vietnamblockchain.asia/industries/logistics ... Benefits of application of Blockchain in Logistics Applying Blockchain Technology in Logistics has brought us a wide range of advantages First and foremost, implementing Blockchain in logistics offers... logistic businesses plays an essential role in enhancing blockchain technology, starting with automating processes and digitizing data In addition, improving the capacity of connecting infrastructure... current status of implementing blockchain in Vietnam’s logistics still has some problems such as poor infrastructure, mistaken thoughts of businesses and communities about blockchain, etc Thus,