DePIN has a trillion-dollar opportunity in logistics | Opinion

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As a researcher with extensive experience in the logistics industry, I strongly believe that web3 tech holds immense promise as the natural successor to outdated software systems and processes plaguing the industry. However, the implementation of open, decentralized networks and token reward systems in supply chain and logistics has yet to gain significant traction.

The logistics sector faces significant challenges with antiquated software systems leading to inaccurate data. Many of these systems lack compatibility, uniformity, and unchangeability, which is disappointing for logistics partners seeking advanced solutions. Web3 technology emerges as a compelling alternative, offering advantages such as streamlined transactions, robust security, adaptability, clear visibility, and user-friendly access – features that surpass the limitations of outdated systems.

Although it’s widely believed that open, decentralized networks and token reward systems have not yet taken root in supply chain and logistics, this may be due to the fact that no one has effectively motivated the generation of high-quality data. To create a successful Decentralized Provenance Information Network (DePIN) solution for logistics, it’s crucial to concentrate on incentivizing the transparent production and sharing of data, ultimately improving industry-wide standards and potentially saving billions in annual costs.

Resistance to change

As an industry analyst, I can tell you that the intricate $9.7 trillion global transportation and logistics sector is a complex web of interconnected components. Many established organizations, including shippers, freight brokers/forwarders, and carriers, are deeply engrossed in managing their daily operations, leaving them reluctant to disrupt long-standing systems.

Despite the fact that embracing new technologies is eventually unavoidable for businesses, many executives tend to delay this transition due to perceived financial burdens. The expenses associated with overhauling their existing systems and aligning them with a standardized data quality framework seem exorbitant compared to the benefits of upgrading. Consequently, companies persist in adding new components to their infrastructure as temporary solutions, without addressing the underlying issue.

The inflexibility to adopt new methods isn’t the sole obstacle we face. The logistics sector is characterized by its fragmented nature, lacking uniform data norms and proven strategies. A pervasive issue is the absence of transparency and mutual trust among major players, leading them to safeguard their information rather than exchange it. Consequently, there’s no compelling motivation for rivals to merge their separate systems to benefit the industry as a whole. Essentially, each organization operates independently: competition remains intense, and none are willing to pioneer change first.

Rise and fall of TradeLens

‘No one’ isn’t strictly true. In 2018, a web3 shipping solution called TradeLens was announced as a joint venture between Danish logistics giant Maersk and IBM. Despite posting positive results—over 300 companies signed up, and the solution tracked four billion events—TradeLens was mothballed in 2022. It failed to reach the “commercial viability necessary to continue work and meet financial expectations.” Plainly said, it wasn’t profitable for TradeLens or its partners, and the benefits they received from a permissioned blockchain solution didn’t justify the cost.

As an analyst, I’ve closely observed TradeLens, a pioneering logistics solution that has been operational for several years, bringing on board logistics firms, tracking shipments, and publishing documents. It showcased the readiness of some stakeholders to embrace innovation. However, it failed to gain widespread adoption. One significant drawback was its centralized nature, controlled by Maersk – a competitor for many potential onboarding firms. Furthermore, being based on a permissioned blockchain restricted its features compared to decentralized, permissionless chains. It lacked the unique benefits such as decentralization, tokenization, digital wallets, payments, and tokenomics.

In the end, Maersk and IBM entered into this partnership due to their recognition of a significant business opportunity worth billions in enhancing logistics. Regrettably, they didn’t fully capitalize on it. On the other hand, companies such as Chronicled, Slync, and CargoLedger identified the same potential and acted upon it with varying levels of achievement.

The promise of DePINs and TIDINs

As a researcher exploring the latest technological advancements, I’ve discovered an exciting development in web3 technology that holds great promise for revolutionizing logistics solutions. Instead of relying on traditional centralized systems, decentralized physical infrastructure networks, or DePINs, represent a new approach by merging the principles and technology of web3 with real-world infrastructure services.

As a data analysis expert at HEALE, I propose a solution utilizing this technology to motivate improved data handling: a unified API and token-based reward system, which we refer to as the Token Incentivized Data Infrastructure Network, or TIDIN for short.

Using DePINs, nodes are added to a network through the contribution of individual hardware resources. On the other hand, TIDINs operate by integrating with pre-existing hardware systems such as ELDs, TMSs, ERPs, and so forth. The network encourages optimal data handling practices via tokens, leading to more efficient transactions, shipments, and quicker settlements within the logistics sector.

DePINs and TIDINs promote community-managed infrastructure, but TIDINs specifically focus on motivating participants to enhance data quality. This is essential since poor or absent data is estimated to cost businesses approximately $600 billion annually, as reported by the Data Warehousing Institute.

The issue of “grimy data” significantly impacts effective planning and collaboration, leading to missed deadlines, inflated inventories with inaccuracies, squandered resources, and lost or misplaced shipments. Even among companies, there is a pervasive lack of trust, as demonstrated by payment disagreements between shippers, freight brokers/forwarders, and carriers. To address these concerns and enhance industry adaptability, it’s crucial to adopt a unified data recording system.

A platform that filters out unwanted data and guarantees the accurate flow of information throughout the supply chain and shipping process holds immense potential to revolutionize the logistics sector. In my opinion, web3 technologies, specifically Transactional Identity Decentralized Identifiers (TIDINs), offer a promising solution by incentivizing the generation and exchange of reliable data. By reshaping the fundamental logic of logistics with this new approach, we can create a more profitable, dependable, and eco-friendly ecosystem for all stakeholders involved. To persuade industry leaders to embrace this alternative, it’s essential to highlight the advantages in terms of profitability, predictability, and sustainability.

Todd Haselhorst

As a researcher studying the logistics industry, I’d describe Todd Haselhorst as the visionary leader of HEALE Labs. HEALE Labs is a pioneering tech firm where I work, specializing in logistics solutions. We employ decentralization and tokenization technology to combat common issues such as errors, fraud, theft, and waste within our industry.

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2024-06-20 20:37