Posted on January 1, 2019 at 12:00 PM
Nick Szabo in 1994, first came up with the term “Smart Contract” defining it as "a set of promises, specified in digital form, including protocols within which the parties perform on these promises." Since that time the concept has evolved many folds, making it a very sought-after tool for contracting now a days.
Smart Contracts have pioneered their way into almost every industry. While some industries have leveraged it aggressively others are still to see it in full execution. Logistics industry is at the state of enquiry, investigation & scrutiny when it comes to implementation of Smart Freight Contracts.
Smart Freight Contract essentially mean using a code that is encrypted on to a computer for the purposes of enforcement and execution. While transacting via Smart Contracts, neither the shipper nor the carrier requires any middlemen for execution.
The key distinguishing feature between Traditional Contracts & Smart Contracts is that they are not self-executing in nature, unlike Smart Contracts. Meaning breach of a traditional contract is to be established by a middleman (for example, a lawyer or a Court) whereas on the contrary, Smart Contracts are self-enforcing for all the terms and conditions programmed there in and any non-performance or deviation establishes the breach su moto.
Having an understanding that Smart Contracts are digital in nature and self-executing, it can be logically deduced that they demand a certain degree of cohesiveness and clarity about the terms and conditions. Unlike in a Traditional Contract, in a Smart Contract there is no room for ambiguity or issues pertaining to interpretation of terms.
● Dynamic: These contracts can be modified at a click requiring only the approval of both the contracting parties.
● Records Ownership: As inventory move through the supply chain, it always helps to know who is responsible for procurement & at what service level agreements.
● Managing the tasks: Auto trigger clauses of smart freight clause leads to perfection in a minimum span of time.
● Targeting Freight Market: Customized Smart Contracts facilitate target specific freight markets.
● Negotiation Trail: Smart Contracts provide for discussing, negotiating & approving of the contract from both the ends always maintaining a trail of communication for post reference.
● Data recording: Accurate transactional data is recorded with each process.
In a survey it was estimated that 10% of all the freight invoices carry and supply inaccurate data, which gives rise to a lot of disputes and process inefficiencies in the field. Accenture expects the annual freight spend to be minimum 5%, which will happen only when overpayment is avoided, and accuracy is improved.
According to market research firm IDC, companies lose 20% to 30% in revenue every year due to inefficiencies. Smart contract is a “single system of record,'' which thus helps execute the processes efficiently including auto generated freight invoices.
While low costs, speedy transactions, elimination of middlemen, greater control are few of the many benefits of smart freight contracts- being Transparent, Immutable & Distributed overtop all the other positives.
90 MILES STRAIGHT provides for shippers and carriers to create smart adaptive contracts compatible for all types of freight business models. The traditional lengthy, ambiguous & often contingent traditional freight contract is challenged by precise, clear & objective freight contracts resulting in minimal contractual disputes. Both shipper and carrier are bound by mutually approved service level agreements from order booking to final delivery. Comprehensive tweaks trail of a freight contract ensures satisfaction of both parties. It is a self-executing contract that digitally facilitates, verifies and enforces the agreed terms between the shipper and the carrier with respect to SLAs for pickup, delivery, freight prices & other mutual liabilities.