The logistics industry faces challenges with outdated software systems resulting in poor data quality. These systems lack interoperability, standardization, and immutability desired by logistics stakeholders. Web3 technology is seen as a potential successor to these legacy systems, offering transactional efficiency, cryptographic security, scalability, transparency, and accessibility.
However, open, decentralized networks and token reward systems have yet to fully integrate into supply chain and logistics processes. One reason for this slow adoption is the reluctance of established companies to overhaul their long-standing systems and adopt universal data quality standards. The cost of such major changes often outweighs the perceived benefits, leading companies to bolt on new systems to address symptoms rather than the root problems.
Additionally, the highly fragmented nature of the industry, with no universal data standards or best practices, contributes to resistance to change. TradeLens, a web3-powered logistics solution, serves as an illustrative example. Although it onboarded logistics firms and tracked shipments, it failed to reach commercial viability.
Its centralized nature, control by a competing company, and lack of unique features limited its success. Other companies have also recognized the potential of web3 for logistics but have approached it in different ways with varying degrees of success. To address these challenges, the proposal of a token incentivized data infrastructure network (TIDIN) is put forward.
This network aims to incentivize better data practices and promote information cleanliness by using tokens. Such networks can also help in fostering community-driven infrastructure management. The industry’s inherent mistrust, even within individual companies, and the prevalent payment disputes highlight the need for a universal record system to ensure the flow of good data through the supply chain and shipment lifecycle.
The adoption of web3 technologies, particularly TIDINs, is presented as a key solution to incentivize the production and sharing of better data, thus changing the game theory at the core of the logistics industry. Ultimately, the goal is to persuade the industry’s key players to embrace this new game, one that is more profitable, predictable, and sustainable for everyone involved.