Potential of Blockchain Technology and Distributed Ledger Technology in the Commercial Vehicle Industry
Master’s Thesis by Benjamin Beyer (benjamin.beyer@tum.de)
In cooperation with Knorr-Bremse AG
The commercial vehicle industry is undergoing rapid change. Developments in autonomous driving technology, new types of powertrains, and rising connectivity will have a profound impact on the industry. The future role of other novel technologies such as blockchain technology and distributed ledger technology (DLT) in the commercial vehicle industry has not yet been thoroughly explored, although a wide range of applications are conceivable.
🤔 So what exactly are blockchain technology and DLT?
DLT is an umbrella term for all distributed technologies enabling secure transactions between untrustworthy participants through algorithm-based consensus. Blockchain is a specific DLT concept. In a blockchain, a series of records is combined into timestamped blocks which in turn are cryptographically linked by referencing the previous block. Depending on the specific implementation, blockchain networks can possess salient features such as security, immutability, and privacy without relying on a central authority.
🙇 Motivation
The motivation for this thesis was to research how blockchain technology and DLT can be utilized in the commercial vehicle industry to solve existing problems or create novel systems. The main objective was threefold: The first goal was to identify potential applications in the commercial vehicle industry by conducting analyses of the literature and the organizations active in the ecosystem. Second, five of the applications were analyzed in depth using the Blockchain Innovation Framework (BIF) as developed in Hughes et al. (2019, pp. 125–126) and by conducting expert interviews. The last goal was to conclude by giving organizations in the commercial vehicle industry strategic guidance on their approach toward blockchain technology and DLT. In the following you can see an overview of my results.
🧐 Identification of Applications of Blockchain Technology and DLT in the Commercial Vehicle Industry
Broadly summarized, all identified applications use blockchain and DLT to transact or store data or value. The advantage of blockchain and DLT in most applications is that they allow data to be stored immutably and enable the need for trust or an intermediary between parties to be bypassed. A total of 12 applications were identified. It should be noted that the applications are not necessarily mutually exclusive, i.e., there may be overlap between different applications.
✨ Three Promising Applications
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♾️ Vehicle Lifecycle Monitoring
A vehicle lifecycle monitoring platform based on blockchain or DLT allows for the decentral and immutable storage of vehicle data during its lifecycle. For example, the vehicle ownership history, vehicle repairs, replacement of vehicle parts, etc. are all tracked and stored immutably. The different stakeholders during the vehicle lifecycle (repair shops, insurance companies, OEMs, etc.) are connected with each other on the decentral and impartial platform eliminating data silos and enabling streamlined cooperation. The untrusted nature of the network participants invites a decentralized solution. An example project realizing such a system is the cardossier platform in Switzerland.
Nevertheless, more research and field studies are needed to determine the overall added value of such a platform, as well as the economic value and incentives for the participating parties.
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💸 Vehicle-to-Everything Identification and Payment
Another promising application for the commercial vehicle industry is a vehicle-to-everything identification and payment system based on blockchain or DLT. The goal of this twofold system is to create a highly automated machine-to-machine payment process for use cases such as payment for fueling, charging, parking, etc. Blockchain and DLT enable the usage of self-sovereign identity architecture allowing for secure digital identification of vehicles to other network participants. Further, blockchain or DLT can be used to process payments without the need for an intermediary. One additional major advantage of a blockchain- or DLT-based architecture is that it is an open system allowing for interoperability between the systems of different organizations such as OEMs and service providers. Daimler Truck is an exemplary organization actively developing and testing such a system.
Currently, technical difficulties especially in terms of transaction speed, and implementation costs still pose challenges to kick-off the widespread adoption of an identification and payment system.
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📦 IoT in Transport Systems and Supply Chain
The third application with high potential is using blockchain or DLT to secure the data of IoT sensors monitoring the conditions of freight during transportation. The key advantage is that the recorded data is maintained in an immutable manner and may afterwards be utilized to digitally prove the circumstances surrounding transportation. Examples are monitoring the temperature in cold chains, or monitoring harsh acceleration/deceleration for fragile freight. Additionally, the system allows achieving better end-to-end visibility by storing some data on-chain in a viewable manner. Taking into account data protection, storage capacities, and scalability issues, it is advisable to store mostly compressed encrypted data. IBM for instance offers a blockchain-based IoT solution for cold chain monitoring in addition to multiple other blockchain solutions for supply chain systems.
The major inherent weakness of this system is that the sensors can be tampered with or bypassed, resulting in false data being uploaded to the system.
⁉️ Two Applications with Less Potential
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🛡️ Usage-Based Insurance
In a usage-based insurance system based on blockchain or DLT encrypted vehicle usage data is uploaded to the ledger. This allows the vehicle owner to share the data at a later point in time with the insurance while still guaranteeing data integrity. This system does not solve the issue of exposing private sensitive data. Hence, the advantages of a blockchain- or DLT-based solution are neglectable as centralized architectures can achieve a similar result without the added system complexity of a decentralized solution. More research is needed to solve the privacy issues for usage-based insurance. Potentially privacy-preserving smart contracts or other architectures based on blockchain or DLT will help to solve this issue in the future.
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🤑 Data Monetization
The other application with lower potential is using blockchain and DLT in a vehicle data monetization system, meaning a platform in which interested parties buy the data generated by vehicles. A decentralized architecture addresses the fragmentation in such an environment by providing a transparent and holistic platform for data monetization. This becomes increasingly relevant when individual vehicle owners monetize their data and not just larger corporations like OEMs or vehicle fleets. Such a platform allows streamlining of the data management and payment process. However, a decentralized system does not address other major issues present in such a system like privacy issues and legal issues. Additionally, the business case has to be defined and investigated more clearly meaning what this data can effectively be used for.
🚛 What should Organizations in the Commercial Vehicle Industry do?
Generally, blockchain and DLT are potentially useable in diverse applications in the commercial vehicle industry. Organizations should raise awareness of blockchain and DLT among their employees. The technologies should be perceived as potential technical solutions to problems, especially when trust needs to be established between different parties. Furthermore, organizations should monitor and evaluate blockchain and DLT solutions implemented in practice, solutions proposed in academia, and developments in consortia (e.g., MOBI) and in other projects (e.g., Gaia-X). Moreover, organizations should evaluate their strategy regarding specific applications of the technologies based on their own goals and capabilities. Organizations that decide to develop or implement blockchain and DLT solutions should seek collaboration with other organizations. Distributed systems oftentimes can only unfold their full potential when implemented across organizations meaning an open collaborative approach is advisable.
Blockchain and DLT will potentially impact various areas of the commercial vehicle industry. Existing systems could be disrupted, or completely new systems might arise enabled by blockchain technology or DLT. The exact impact is not yet foreseeable, but it is clear that blockchain and DLT have the potential to profoundly change several areas in tomorrow's commercial vehicle industry.
