Blockchain Implementation Slower than Expected, According to a Report

Modest results from blockchain pilots leave the industry believing that the technology isn't worth the investment at this time.

Getty Images 935705246 Blockchain
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Blockchain technology was supposed to be a disruptive force throughout the industry, but in a report entitled "Resolving the Blockchain Paradox in Transportation and Logistics" by the Boston Consulting Group suggests that adoption of the technology is slower than expected.

The survey found that 88 percent of respondents believe that blockchain will disrupt the industry on some level, while 59 percent that the disruptions will take place within the next two-to-five years. Additionally, 74 percent of respondents indicated that they are exploring opportunities only superficially or haven't thought about blockchain at all. 

However, the survey suggest that blockchain has been slow to adopt because of a limited understanding of the technology and the absence of coordination among industry players, creating a "fundamental paradox." Blockchain can increase transparency throughout the supply chain, but in doing so requires collaboration among competing companies. Mistrust between companies makes it difficult to bring participants into a common blockchain ecosystem. 

“This industry is often rife with mistrust, with lots of handoffs among multiple parties, more so than in any other industry,” Andy Schmahl, BCG partner and managing director tells Logistics Management. “Most industries have straightforward, bilateral, or maybe trilateral, transactions. But, over the course of any supply chain or transportation move, a single good can change hands dozens of times and can have multiple dozens of players when you factor in brokers and regulators, customs agencies, and other things. Each of them has some vested interest, and things often don’t go as planned, which can lead to finger pointing, and that generates huge frictions, in terms of costs and time.”

Still, blockchain pilots have been done, though the results are usually modest, leaving others to believe that the technology isn't worth investing in at this moment.