Blockchain adoption in serial logistics service chain: value and challenge

Abstract

Inefficient practices in the logistics industry cause huge losses in social resources. Addressing the quality control issues is challenging in multi-stage transport. Due to the structural characteristics of the serial logistics service chains, the real delivery quality of each Third Party Logistics (3PL) is invisible to the Lead Logistics Provider (LLP), and the defects of a single 3PL’s delivery quality will be covered up. Thus, unobservable delivery quality triggers the moral hazard action of 3PL, and strengthens the inequities in a serial logistics service chain. Blockchain technology can be an effective tool to resolve the moral hazard problem. We employ game theory-based models to investigate the blockchain adoption issue in serial logistics service chains. Adopting blockchain technology might bring Pareto improvement in delivery quality and total profit of the service chain. However, 3PL’s profit may be hurt because of blockchain adoption. Therefore, successful blockchain implementation depends on whether the initiator of a blockchain programme can properly incentivise 3PLs.