The logistics industry is being revolutionized with digital transformation solutions and artificial intelligence. With decentralized identity in logistics operations, we can witness even more revolutionary transformations. The global logistics market is projected to reach a staggering $6.55 trillion by 2027. This exponential growth is accompanied by an increasing need for secure, efficient, and transparent identity management systems. 

Today, data breaches and identity theft are on the rise. The logistics sector faces many challenges in managing identities across complex supply chains. The average cost of a data breach in the transportation industry reached $4.43 million from March 2023 to February 2024. These alarming statistics underscore the critical importance of robust identity management solutions in logistics. 

Decentralized identity technology offers a promising solution to these challenges as it provides a secure and efficient way to manage identities across the supply chain. By Decentralized Identity with Blockchain and cryptographic technologies, decentralized identity systems are poised to revolutionize how logistics companies handle sensitive information, verify credentials, and streamline operations. 

Importance of Identity Management in Logistics 

The concept of identity management in logistics has evolved significantly over the years. Earlier, logistics companies relied on centralized databases and manual processes to manage identities of employees, partners, and assets. This approach, while functional, was prone to errors, security breaches, and inefficiencies. 

As the industry grew more complex and globalized, the limitations of these traditional systems became serious. The need for a more robust, secure, and efficient identity management system led to the adoption of digital solutions.  

Moreover, even these digital centralized systems have their drawbacks because they are vulnerable to cyber-attacks. 

Effective identity management is crucial in logistics for several reasons: 

1. Security: It protects sensitive information about shipments, routes, and personnel. 

2. Efficiency: Streamlines identity verification processes, reduces delays, and improves operational efficiency. 

3. Compliance: It helps in compliance with regulatory requirements for data protection and privacy. 

4. Trust: It builds trust among partners in the supply chain for smooth operations. 

5. Traceability: Ensures the authenticity and origin of goods by tracing the supply chain. 

What Are Problems with Accessibility and Data Security with Current Identity Management in Logistics? 

The current identity management systems in logistics face several critical challenges that hinder efficiency, security, and trust within the supply chain. Let’s examine five key problems, supported by real statistics and examples: 

1. Data Breaches and Cyber Attacks 

The logistics industry is a prime target for cybercriminals due to the vast amount of sensitive data it handles. For July 2023 to June 2024, 27 cases of cyber-attacks were reported in the transport & logistics sector. These breaches not only lead to financial losses but also erode trust in the supply chain. 

Hellmann Worldwide Logistics, which handles over 16 million shipments a year, halted its operations in 2021 for a few days due to cyber-attacks. 

2. Inefficient Identity Verification Processes 

Traditional identity verification methods in logistics are time-consuming and there are chances of errors. Manual identity verification processes in supply chains can take up to 48 hours. 

Manual identity checks for truck drivers entering the facility result in more waiting time. 

3. Lack of Interoperability 

The fragmented nature of identity management systems across different logistics providers and countries creates significant challenges in seamless operations. Lack of interoperability in supply chain systems costs a slot to the industry. 

For instance, if a shipping company cannot integrate its identity management system with local port authorities in different countries, it can lead to delays and additional administrative. 

4. Compliance and Regulatory Challenges 

With the introduction of stringent data protection regulations like GDPR and CCPA, logistics companies face increasing pressure to ensure compliance. Non-compliance can result in hefty fines – up to 4% of global annual turnover under GDPR. 

In 2019, Austria Post was fined €18 million for GDPR violations related to leakage of customer data. 

5. Limited Visibility and Traceability 

Current systems often lack the capability to provide end-to-end visibility of identities and credentials across the supply chain. Several logistics companies have cited lack of visibility as their biggest challenge in supply chain management. 

A report states that the pharma industry loses roughly $35 billion annually due to challenges in verifying the authenticity of temperature-sensitive medications throughout the supply chain. 

These problems show the urgent need for a more secure, efficient, and transparent identity management solution in the logistics industry. A decentralized identity can be the best approach to address these challenges. 

Also, You Can Read This: Use Cases of Verifiable Credentials in Manufacturing Industry for Supply Chain Traceability 

Decentralized Identity: A Perfect Solution for Modern Logistics 

Decentralized identity is a modern approach to how we manage and verify identities. It is not controlled by a centralized organization. In the logistics industry, it offers a secure, transparent, and efficient solution to the challenges faced by the regular identity management approaches. 

Decentralized identity is based on the principle of self-sovereign identity (SSI). This means that individuals or organizations that hold/possess this have complete control over their digital identities and personal data.  

They don’t have to rely on centralized authorities/organizations to store and verify identity information. 

Main components of decentralized identity are: 

• Decentralized Identifiers (DIDs): Unique, cryptographically verifiable identifiers that showcase individuals, organizations, or assets. 

• Verifiable Credentials: Digital version of identity information that can be cryptographically verified. 

Use Cases of Decentralized Identity in Logistics 

Decentralized identity in logistics can be used to address the issues with the current identity management systems used in the industry. 

1. Secure and Efficient Access Control 

Decentralized identity in logistics offers secure and instant verification of identities across the supply chain. Logistics companies can incorporate a system where employees, drivers, and partners have digital identities. These identities can be instantly and securely verified at multiple checkpoints to reduce wait times and increase security. 

2. Supply Chain Traceability 

Logistics companies can create an immutable record for a product journey by giving decentralized identities to products and shipments. Such practice increases supply chain transparency and makes it easier to track the origin and the whole product’s journey. 

Check This: 6 Benefits of Supply Chain Transparency 

3. Compliance and Auditing 

Decentralized identity in logistics companies can make compliance easy. It creates verifiable credentials for all identity-related transactions and automates the compliance process. This practice makes it easy for companies to show compliance with data protection regulations and industry standards. 

4. Interoperable Identity Verification 

Decentralized identity system offers seamless verification of identities across different organizations and borders. This is valuable in international logistics, where multiple parties need to verify identities and credentials. 

In a nutshell, decentralized identity can revolutionize identity management in the logistics industry and increase security, efficiency, and trust across the supply chain. 

Conclusion 

If the logistics industry starts incorporating decentralized identity solutions, it will create a secure, transparent, and efficient supply chain ecosystem. This solution addresses several problems faced by identity management and improves traceability.   

EveryCRED offers a customized decentralized identity solution for the logistics industry. With our verifiable credentialing and decentralized identity solution, we can provide a comprehensive suite of tools and services designed according to the specific needs of supply chain management.  

Connect with our team to learn more about how EveryCRED can revolutionize the logistics industry, starting with your company.