Intelsius News | Blockchain in Cold Chain Logistics

In the last of three articles exploring biopharma trends to look out for in 2021, we’ll take a look at the potentially world-changing impact of blockchain in cold chain logistics.

What is Blockchain?

Blockchain is an internet-based technology that is prized for its ability to publicly validate, record, and distribute transactions in immutable, encrypted ledgers.¹ One effective way to think of blockchain is to think of a house sale. Currently, when person A (the buyer) wishes to buy a house, they will approach person B (the vendor) with an offer. If person B accepts that offer, rather than person A and B making a direct transaction between one another, the transaction will be mediated by a trusted third party (usually a bank), who will act as a broker, ensuring both person A and person B feel secure that the nature of their agreement has been legally verified and documented.

One of the core benefits of blockchain is that it removes the need of the third-party, as it acts as a secure ledger of each transaction made within its network, which is then ratified by the users of that network rather than a trusted third-party. It also removes the processing element of a third-party, meaning money can move seamlessly between person A and person B (not over the days and weeks it can sometimes take for a bank to process a transaction), at no cost, and rather than relying on a trusted third party to keep a record, the record is available within the blockchain network, visible to all its members, and forever stored should it be required. Even if a block in the ledger is deleted or altered, it is immediately restored/repaired, and re-installed into the chain by an algorithm that runs simultaneously within the blockchain.

Key benefits of blockchain technology include:

Removes ‘trusted’ third-party (bank, payment platform etc.)
Creates secure internet-based ledger where all transactions are stored and verified by the users
Instant, free payments
Removes outdated database systems and administrative processes liable to error or fraud
It’s immutable (can’t be destroyed)

Currently, blockchain technology has been used primarily as the bedrock technology to support cryptocurrencies such as Bitcoin, allowing for fast, secure, publicly verified transactions between people all over the world. To some, cryptocurrencies are problematic, viewed as ways for people to make what would typically be described as illegal transactions, however blockchain is being adopted by more and more sectors and global companies as they look to capitalise on its unique benefits for business.

Unsurprisingly, trusted third parties such as banks and other broker technologies and businesses have reason to be concerned. Blockchain, and its various cryptocurrencies and applications, has the potential change the world. Instantaneous, free, and secure asset transactions anywhere in the world could revolutionise commerce, putting many out of business, and creating a whole new way of transacting.

Blockchain in Cold Chain Logistics

As with any transaction between two or more parties, transporting biopharmaceutical products from a selling manufacturer to the buying end-user involves numerous steps, administrative processes, and just like a house sale, trust between all parties. A typical cold chain might involve a manufacturer, at least one logistics company, storage facilities, and an end user recipient, with each step requiring checks, handovers, signatories, and logging. Many of these processes are underpinned by manual data entry processes – in some cases, pen and paper exercises.

Keeping track of a payload in transit, ensuring its safety and ultimate efficacy upon arrival with a buyer, and ensuring all records are safely stored and kept is a major undertaking requiring a huge amount of human resource. While cold chains are becoming more and more digitised, with intelligent data loggers allowing for GPS tracking and internal temperature monitoring, what happens to a box in transit, and all the surrounding administration represents risk to both seller and buyer.

So how is blockchain technology applicable to cold chain logistics? And, how does it solve these problems? Some of the key problems blockchain could solve are:

Payment processing (removing time and cost)
Dispute resolution (a decentralised ‘database’ verified only by the key actors)
Administrative efficiency (removing manual data entry and cumbersome digital or hard copy data storage)
Order tracking (real-time payload tracking ensuring better security)

Secure and Trusted

Cold chain security became a hot topic in 2020 as the world looked to ship billions of COVID-19 vaccines around the world at great expense. As reported by the BBC in December 2020, IBM reported that an international vaccine cold chain had been targeted by a highly sophisticated cyber-attack to gain access to cold chain infrastructure.² This recent high-profile attempt may have brought the issue of cold chain security to a wider audience, however the issue isn’t a new one to those who have worked in cold chain logistics for any significant amount of time.

In 2017 a cyber-attack targeting Ukrainian logistics infrastructure ended up effecting multinational logistics companies FedEx, Maersk, and Merck, disrupting services and resulting in over $10billion in damages.

The Solar Winds cyber-attack of 2020 ended up effecting multiple levels of logistics infrastructure, effecting up to 250 of their partners and doing over $90million in damages.³ These attacks typically don’t start by targeting the intended main target, instead they go after their partner companies deemed to have lesser security protocols, in an attempt to gain access to an entire portfolio of companies and networks.

One of blockchains most highly regarded features is that unique blockchains can be created between trusted parties without so-called trusted third parties, with either open or closed access networks available to a group of partners.

For example, it is possible to create a blockchain with only a handful of verified users, and as the chain is immutable and encrypted, any attempt to gain access without permissions would be extremely difficult, and even if it was achieved, as the records are immutable (unlike a standard database), records are impossible to permanently delete or alter. That means you can keep your circle small, and limited to those who need access, and managed in a way that suits you with confidence in the records being created as every new block is added.

Efficient and Visible

As outlined by the infographic above, with each link in the cold chain connected by an encrypted block, only accessible to trusted users, you can be sure that your cargo is being handled by the right people, in the right places, at the right time, with no risk of tampering or intervention by untrusted third parties, throughout the cold chain.

As the blocks are updated instantly, it allows for a seamless and largely automated and paper-free logistics network, not only providing trust and security, but increased efficiency.

This removal of third-party software, agencies and individuals not only secures your cold chain but speeds it up and cuts costs. But the benefits go beyond security and speed, with increased visibility within the instantly updating ledger (so, you’re seeing receipt of goods, invoicing, payments etc, all happening in real time within a secure online ledger), you can achieve a previously unforeseen level of oversight of your goods in transit.

Added to existing GPS and internal temperature monitoring software, blockchain adds a further level of intelligence to a market valued at $159million in 2018, and projected to grow to $550million by 2026.⁴ As the market grows, technology and security must grow with it, and blockchain technology provides real solutions to some of the challenges facing the industry.

In Summary

Despite limited existing integration into biopharma cold chain logistics, blockchain is no longer a technology of the future, with numerous examples of the technology already being considered by some of the world’s major logistics players. In a 2018 report on blockchain by DHL, they began by asking the question: ‘What if we could remove the need for intermediaries in the world of logistics? What if transactions could be verified, recorded and coordinated autonomously without third parties? If this could be done, it would eliminate an entire layer of complexity from our global supply chains?’⁵The report goes on to outline challenges and opportunities detail, with the core focus being the untangling of their highly complex logistics networks, and a real desire to invest in blockchain technology in the very near future.

To speak to a member of our team about your cold chain packaging needs, you can do so by contacting your local branch here.

For up-to-date cold chain news, insight and product information, follow our LinkedIn and Twitter.