Although rare, real-world blockchain utility does exist, now evidenced by one company’s efforts to reduce transactional fees in supply chains.
The world is quick to blame inflation for the rising prices at grocery stores and retailers. This was the #1 political issue for recent Election Day voters in the United States. For example, media sources recently reported poll data that 85% of Americans could not afford to spend $200 on a Thanksgiving meal in November 2022, and only 25% could afford $100.
However, few recognize inflation is only part of the problem. Higher costs for products and services are also directly attributable to settlement fees paid by transportation providers who are forced to take out the equivalent of payday loans against their freight invoices.
Shipper payment terms in the transportation industry are known to be egregious, and most transportation carriers cannot afford to wait 30–180 days to get paid. When a carrier factors, it pledges the collection rights in its accounts receivable to the bank and, in exchange, the bank advances cash in about 10 business days.
By industry averages, this cost to carriers is 3% of every receivable — often escalating up to a 25% annualized interest rate. The bank then waits the 30–180 days and collects directly from the freight shipper. If inflation is thought of as a silent tax, invoice factoring is a second layer of silent taxes on everything we buy.
More than 1 million U.S. trucking companies are factoring 100% of their invoices, and 50% of third-party logistics companies are too. Due to inflation, larger transportation companies are also losing 3% or more of their invoice values when waiting over 60 days to get paid by shippers. These costs create higher freight rates, and the excesses ultimately trickle down to every household and consumer.
Fixing a broken supply chain by settling on the blockchain
TruckCoinSwap (TCS) is a fintech and freight-tech company utilizing a blockchain-integrated mobile app to provide fast and free freight receivables settlement to transportation companies. Moreover, TCS is listed on CrossTower in the U.S. and abroad in 80 countries, and is now also listed on Uniswap.
Chief technology officer Jake Centner explained:
“Centralized exchanges can work very well, and the team couldn’t be more proud of the relationships TCS has made. However, the TCS token must also have a decentralized exchange and non-custodial option in the ecosystem for transportation companies and holders. Uniswap has been the gold standard in this space.”
To that end, TCS has created a process and platform identical to how carriers are settling now, with one added step. A few days after uploading freight documents into the TCS mobile app, a push notification is sent and settlement is made available in the real-time U.S. dollar (USD) value of TCS tokens.
The carrier can then accept settlement via direct deposit from TCS. After receiving the balance in its crypto wallet, the carrier can immediately sell through its exchange market to regain USD liquidity. By taking settlement via TCS, and being able to sell in a matter of minutes, carriers avoid both factoring costs and crypto volatility.
By industry averages, TCS estimates every factoring freightliner can recapture a significant portion of its net revenue. In the supply chain, reducing operating costs makes transportation companies more solvent and applies downward pressure on freight rates. In time, the costs of goods and, more specifically, food prices, can decrease.
Regarding the company’s adoption, CEO Todd Ziegler shared:
“TCS already has truckers involved in the beta, and we were just approached by two more large strategics. One has 223 trucks. The second is one of the largest companies in the U.S. managing freight documents, with over 500,000 transportation users. It speaks volumes that these companies are already interested in integrating with TCS.”
The future of freight and blockchain
Earlier this month, TCS presented its solution at the Future of Freight conference to over 20,000 attendees and has since gained traction in both the crypto and transportation communities with features in FreightWaves, business publications and other related media.
With many strategic relationships already in play, TCS believes it is in a strong position to help carry the transportation industry forward into web3. In looking ahead to the intersection of the two industries, Ziegler offered:
“Following recent court rulings and the acceleration of the DCCPA [Digital Commodities Consumer Protection Act] on Capitol Hill, we’re going to see U.S. crypto exchanges eliminate several coins. Many exchanges are already struggling for revenue and AUM [assets under management], and they’re not going to stick their necks out in the wake of FTX. The projects with no real use case will be the first to go, and the digital assets with value propositions to industry will see greater market share.”
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