Declining markets are typically those in which annual industry revenue steadily decreases due to the saturation of a market, a decline in the market size, or the introduction of technology or a product that acts as a replacement. Transportation is an example of a market that has suffered a great many setbacks, due in part to its difficulty adopting and utilizing modern technology, along with the issues inherent in the industry’s many moving parts — the shippers, the carriers, the variable pricing of fuel, and the use of middlemen that broker the transactions. Challenges with negotiating all of these moving parts include everything from dealing with large number of hours of service required by the carriers to concerns about safety, compliance and overall accountability during the transportation process.
Increasing profitability in a declining or stagnant market is a daunting task, but not altogether impossible. According to Carter Pennington, some general strategies include value-focused management, a reduction of waste or cycle time, and the institution of value-based metrics.
“Increasing profitability and, in turn, enterprise value is an enormous challenge in a stagnant, mature, or otherwise sleepy industry,” says Pennington. “A company in distress needs to shift focus away from the strategies and management tactics that might have been successful during industry growth periods and instead shift to a different paradigm.”
Blockchain technology could be the paradigm needed. The primary reason is that the blockchain acts as a public database that records digital transactions and it combines the technologies of private key cryptography, a distributed network with shared ledger, and an incentive to service the network’s transactions, record-keeping and security to do so. These characteristics may make it capable of eliminating the middleman and creating an environment of complete transparency, generating a greater degree of efficiency and trust. In a world where time is definitely money, this can be a life saver for industries that are experiencing excruciating losses.
Fr8 Network is representative of one such industry.
“The purpose of using blockchain technology is to create a solid network, a complete system that allows us to maintain integrity and transparency in both our business dealings and in the processes,” says Fr8 Network Chief Strategist Shankhri Balaji. “In our case, we want to make transportation not only reliable, but to streamline the process as much as possible for our consumers. Our goal is to provide premier services at a low cost. Fr8 Network is all about a commitment to quality service and competitive pricing.”
Blockchain’s smart contracts can, for example, help create a faster, more efficient shipping process, and make it easier for the shipping and tracking process to be completed. Smart contracts may help negotiate processes that do everything from send manufacturers automatic shipping updates to providing clear monitoring of progress every step of the way. Additionally, the peer-to-peer transactions can capitalize on the shared ledger, thereby possibly eliminating brokers. Shippers and carriers, then, can conduct business in a one-on-one, transparent and trustworthy environment.
“The automation of the process afforded to us through blockchain technology allows us to coordinate all of the trucking and freight industry’s discrete parts, creating a more reliable and transparent process from beginning to end,” adds Balaji.
Exploring the value of blockchain may be what’s needed for the rejuvenation of a transportation business, especially if technology has been something that has previously been difficult to integrate or market processes are not as efficient as they could be. And it may apply beyond transportation. The paper industry, textile mills, and even mortgage brokering are among the 25 dying industries in the United States. Like transportation, many of these industries experience difficulty due to the many people involved, as well as the dynamic elements of brokering contracts, delivery of raw materials, and the increasing automation of skilled labor processes. A critical review of how Blockchain technology may coordinate the efforts of these industries, allowing them to network and create a complex system that is manageable and trustworthy, may be just what is needed.