The Blockchain in Supply Chain Market is forecast to reach $524m by 2024 and is estimated to grow at a CAGR of 50% during the forecast period 2019-2024.
The growth of the market is attributed to advantages offered by technology such as improved operational efficiency, enhanced inventory management, transparency and reduced days of sale across the supply chain.Blockchain technology asset tracking applications will reduce revenue loss by approximately 20-30% in the future.The Blockchain in Supply Chain Market is poised to grow at a rapid pace owing to wide range of applications in e-commerce, automotive and maritime industries. In maritime trade, the technology being used for asset tracking applications and help to reduce the revenue loss that occurs due to maritime fraud that currently accounts for $600 billion annually. Blockchain technology asset tracking applications are expected to reduce revenue loss by approximately 20-30% in the future.
The fastest growing sub-segment under application segment is procurement which is anticipated to grow at a CAGR of 74% during the forecast period 2019-2024, owing to rising adoption of technology for sourcing management. In May 2019, Daimler, a key automotive player has turned to blockchain tool Icertis Contract Management (ICM) to manage sourcing and contracting of its 400,000 supplier base.
Asia Pacific (APAC) is poised to emerge as a largest region for the Blockchain Technology in Supply Chain market with revenue of $256m by 2024. The region is emerging as fastest growing owing to rising awareness about the advantages of blockchain in supply chain such as operational and cost efficiency. Blockchain spending in China is anticipated to cross $1.5 billion mark by 2022, by growing at a CAGR of more than 80% during 2017-2022, this is poised to increase the use cases of technology across various industries. In latest developments, Alibaba, China’s largest e-commerce and retailer company has announced to adopt the technology for cross border supply chain to reduce the complexity and improve transparency.
The adoption of blockchain is also being taken up by the governments in countries such as Singapore which will add to the growth of market in APAC. In January 2019, Singapore government has entered into a MoU with MPA (Maritime Port Authority), Infocomm Media Development Authority (IMDA), the Singapore Shipping Association and Singapore Customs for the development of a Blockchain based maritime trade platform called as TradeTrust.In 2018, North America was the dominating region with more than 33% of the global market share.However, in 2018, North America was the dominating region with more than 33% of the global market share. This is attributed to the presence of major players in the region and rising number of blockchain startups. As of February 2019, the number of blockchain startups in the U.S. were recorded to be over 1,750.
Blockchain Market in Supply Chain Growth Drivers
Rise of e-commerce sector
The e-commerce sector is witnessing significant growth globally. This can be attributed to the rise in smartphone usage, digital payments and the DTC (direct to consumer) brands. According to Internet Retailer, the global e-commerce sales grew by 18% in 2018 compared to 2017. The e-commerce businesses have lengthy and cumbersome processes due to number of stakeholders involved in it which in turn increase discrepancies in the supply chain management, eventually result in losses and customer dissatisfaction. In January 2019, logistics company UPS has made an undisclosed equity investment in Inxeption Corporation for the development of blockchain based e-commerce solutions for B2B buyers and sellers.
Digital Contracts and Payments
According to Ernst & Young, an average U.S. Fortune 500 company has over 60 days sales outstanding owing to the analog gaps which involve the work done in generating invoices or receipts, transfer to clients and process that include payment procedures. High day sales of outstanding results in cash flow problems for manufacturers can cause financial strain for the company. Blockchain can eliminate such hassle in manual contracts and payment procedures by switching to digital contracts and payments. In April 2019, Harmony, a blockchain startup based in the U.S. raised $18m in token pre-sale. The startup focuses on the development of digital contracts.
R&D, Investments and Funding
Chronicled, the U.S. based enterprise supply chain developer had raised $16m in a Series-A funding in January 2019. The company uses blockchain technology to power a platform that automates the supply chain of businesses.
Eximchain, a Singapore based blockchain in supply chain startup had $20m from a group of investors in March 2018. The funding was led by FBG Capital, a China based digital asset management firm.
Major Players in This Market
The major players in the blockchain market in supply chain include IBM Corp., Oracle Corp., T-Mining, DTCO, Deloitte, BTL Group Ltd., Ripple Labs Inc. and other.
In April 2019, Volkswagen Group has announced the partnership with the IBM Corporation for tracking of mineral supply chains with blockchain technology. This partnership will enable Volkswagen to meet the sourcing standards set up by Organization for Economic Co-operation and Development (OECD).
Aiming to promote more efficient and secure global trade, in January 2018, IBM had collaborated with Maersk to develop a distributed ledger technology (DLT) platform for the supply chains to support information sharing and improving transparency.
The Blockchain in Supply chain Market is fuelled by surging digital contracts and payments as it enhances the security in payments and allow stakeholders to track all types of transaction on real time basis. Additionally, the upswing of e-commerce industry globally will provide excellent growth opportunities for the Blockchain in Supply chain Market; as companies such as Alibaba is opting for block chain in their supplychain to strengthen their border supply chain.
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Image: Pascal Bernardon