Our focus is on the trucking industry, which falls under the supply chain category. The trucking industry, specifically the relationship between the carriers, brokers, and distributors, still relies on antiquated practices and technologies. Furthermore, businesses rely on the fact that information is fractured, hidden and requires insider knowledge that can leave many people involved at a disadvantage. A more efficient, transparent, and equitable logistical network will be needed to as new technologies begin to transform the trucking industry. We plan to bring blockchain to this market in order to catalyze market transparency, secure transactions between parties, and maintain a public audit ledger. Smarter trucking needs smarter logistics.
Distributors, Brokers and Carriers
In the day to day operations of the trucking industry three major players are involved in moving ‘loads’. Distributors or shippers are the owners of the loads that need to be delivered from one location to the next. Carriers are companies or independent contractors that own the actual trucks that move the loads. Brokers are parties that work to match distributors with carriers. There are also ‘Carrier-Brokers’ that attempt to do both roles, though they will still often end up relying on outside brokers to line up work for their employes.
For the majority of freight transported today, carriers and brokers still negotiating terms on a per load basis is still the norm. The issue here is that brokers hold all the information when contracts are negotiated, leaving carriers at a disadvantage. Brokers are privy to timetable for a load and the amount a distributor has offered to pay; they have market rate analysis and much more experience negotiating terms than carriers do. Furthermore, it is commonplace for brokers to delay payment after a load has been delivered, and carriers can find it very difficult to resolve that issue or to even find out which brokers are bad actors. Brokers tend not to share information with each other or with carriers making it difficult for carriers and shippers to arrive at maximally efficient routing.
Carriers assume the financial risk involved with transporting a load. Since routes often take them far away from their homes, carriers risk not having round-trip loads and must pay for this ‘dead head’ out of pocket. Carriers also have to pay to insure the loads, are responsible loading and unloading freight (which is unpaid activity since rates are usually on a per mile basis) and assume other risks as well. Carriers lack accurate information to reasonably estimate cost and time associated with a trip. Finally, carriers often wait weeks to be paid. On the other side, brokers also have concerns that come from a lack of knowledge of the carriers they work with. Often it is very hard or impossible for brokers to know if a driver has already reached their daily driving limit, the condition of the carrier’s truck or even the history of the driver. These are facts that carriers will hide such that they don’t lose out on contracts and can create obvious problems for brokers who are trying to ensure loads get delivered on time.
As outlined in the previous section, many of the problems the industry faces today come from a lack of transparency of information and fractured networks of information. Carriers don’t know market rates, the histories of brokers, have limited access to route and risk analysis and rarely know what the distributors are willing to pay for a load. By utilizing the block chain we can create an audit ledger that creates transparency for all parties involved. Smart contracts could hold financial history, information concerning the transportation (time to deliver, fees, etc.) and provide a means for instant payment upon the resolution of contract. This would give carriers insights to market rates, risk analysis and secure and fast payment for work completed. The block chain would also provide a log for brokers to see how much time carriers take to deliver loads, and how much time a carrier has left to drive in a workday. When the federal legislation mandating electronic logging devices (or ELDs) is passed, a web application could allow involved parties to monitor shipments in real time. Live updates to a contract would provide even more detailed information. Immediate/secure payment
Long delays in payment after delivery of freight are a problem faced by many carriers, especially smaller ones. Carriers often have to wait several weeks to receive payment for their services, and would be keen to reduce or eliminate these wait times. Ethereum allows for immediate payment after the completion of contracts, and the speed of payment would bring greater efficiency to the market and offer immediate relief to many who are currently dissatisfied with the financial insecurity common among carriers in the trucking marketplace. Public record of market actors and contracts
The blockchain also supplies a public record of the actors that have engaged in the trucking market. This public record can be used to create historical profiles of carriers, brokers, and distributors that can be viewed and trusted by anyone. It will also serve as a robust audit ledger for outside parties to create implicitly trustworthy information about the flow of money and goods through the trucking market. The public record can also be used to view the history of contracts and their fulfillment. Actual market rates for trucking, expected time of contract completion, transportation risks and other details can be be computed directly from the public record. All of this information about the market actors and the contracts can be compiled to allow for everyone to make maximally informed decisions about who to engage with and how to specify the terms of a contract. We will use the public blockchain to create a database of carriers, brokers, distributors, and contracts. Our product will analyze these data to create a marketplace that can be accessed by anyone to inform their contractual decisions.
Trucking is a $676.2 billion industry. It is also a major employer. Truck driving is the most common jobs in the majority of states in the U.S(58%) and demand for truck drivers continues to exceed the supply Many commentators predict the industry is ripe for disruption. Waves of new technology are slated to fundamentally remake aspects of the industry. Federal mandates for electronic logging devices offer a wealth of new data and increase demand for truck drivers in the near term. Tesla’s soon to be released electric semi is predicted to reduce operating costs by as much as 70% and is paving the way to a fully automated future for trucking. The existing logistical networks that underpin this massive and rapidly changing industry are ripe for new ideas capable of leveraging new ideas to better catalyze change.
To the best of our knowledge no other company is using the Ethereum Blockchain and smart contracts in the trucking sector. However, startups like Convoy and Blacbuck are using modern web applications and gps tracking to compete with traditional brokers. Somer brokers have created ride boards and other applications aimed at matching truckers with contracts. All of the existing models share one defining characteristics, centralized systems that lack transparency.
Convoy in particular stands out as a strong competitor in the space, offering Uber like services matching carriers with shippers. Convoy claims to offer upfront pricing and quick payments, both services that RigQuest intends to afford. However, Convoy does not provide the same level of transparency that RigQuest will provide, meaning carriers who use our service will have better information in negotiating rates.