Blockchains: a new technology with immense potential for trade and logistics

“Blockchains are distributed, forgery-proof data structures in which transactions are logged in their time sequence, transparent, unchangeable and mapped without a central instance. With blockchain technology, ownership structures can be secured and regulated more directly and more efficiently than in the past, as a complete, unchangeable data recording process creates the basis for this.”

SOURCE: GERMAN FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT, BaFin)

Today blockchains are perhaps the biggest current piece of hype in the digital world. Few industries have not already discovered this new buzzword for themselves – and attempted to define it in ways that are often enigmatic. Yet the fact that the German Federal Supervisory Authority, of all bodies, has been able to produce a clear explanation is not without good reason, as this form of data technology can revolutionize the world of finance above all. It is possible that in a few years it will not only make payments, the issuing of credit, and securities trading faster and cheaper but may also may make banks themselves unnecessary.

A blockchain is constructed like a gigantic database that is not tied to a specific piece of hardware; instead its network protocols are distributed in a decentralized manner to a large number of different computers. According to experts, this makes hacking impossible. As a neutral documentation system for sensitive information in particular, the application potential of blockchains in many economic sectors is immense. “This has given us, for example, increased transparency in our aircraft maintenance activities,” says Patrick Götze, Director of Sales New Business at Lufthansa Industry Solutions. “Within a blockchain, a piece of information can be traced at any time. This is particularly advantageous where different companies are working together and using the same data, such as when fitting replacement parts during aircraft maintenance.”

Verification of original parts for aircraft maintenance is one of the many applications for the new technology. It enables replacement parts to be registered in a blockchain immediately after manufacture, together with all relevant information. When a particular component is installed on an aircraft, its data is then stored in another blockchain. Similarly, all subsequent repairs to this component are again stored in a separate blockchain. The result is a complete documentation, that can no longer be manipulated, and that extends over multiple companies.

Bernhard Kube,
Vice President Technology Consulting,
Lufthansa Industry Solutions

Just how large the potential for blockchain technology really is, is a question that Lufthansa Industry Solutions now aims to determine using one of its own laboratories. Since September 2017 the IT provider from Norderstedt, near Hamburg, has been operating a ‘blockchain lab’. Here the company, in collaboration with external experts and institutions, tests out the new technology and its many potential uses. “Our ‘blockchain lab’ is where we develop, trial and test new processes and potential applications based on blockchain technology,” explains Bernhard Kube. And the Vice President Technology Consulting at Lufthansa Industry Solutions is confident: “For such complex topics, a lab of this kind is the key to success – because companies can focus on completely specific questions, with the aid of our experts, and can test out the potential of blockchains for their own business success.”

In addition to the verification of original parts in aircraft maintenance, another possible application for blockchains in the air cargo business is secure tracking for high-value goods, such as fresh food. This has also been recognized by IT services provider IBM, which has recently set up cooperation on blockchains with a number of international companies in the food industry. Members are Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, Nestlé, McLane Company, Tyson Foods, Unilever and Walmart. The joint objective here is to substantially increase the safety of food products throughout the entire supply chain. According to data provided by IBM, many problems relating to food safety, such as contamination, were compounded by lack of access to information and poor traceability. Today, it can thus take weeks to trace the exact causes of a case of contamination.

“Blockchain technology is changing the way like-minded organizations can work together,” believes Marie Wieck, IBM’s general manager for blockchains. “Mutual trust increases immensely since all parties see the situation in exactly the same perspective that there is a ‘single view of the truth’.”

The use of blockchain technology makes sense wherever transparency and traceability are necessary. Food safety is a particularly interesting field of application. The use of blockchains should encourage greater consumer confidence, for in future impartial, reliable information concerning the origin and the condition of food items should be accessible throughout the supply chain, from the farm through transport to the supermarket shelves.

Text by Behrend Oldenburg
Photos: Fotolia/Elnur, Lufthansa