American technology company International Business Machines Corporation (IBM) and Danish box liner Maersk have announced a new collaboration to build a global trade digitization solution using blockchain technology to help transform the global cross-border supply chain.
To be made available to the shipping and logistics industry this year, the blockchain solution will help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process from end to end to enhance transparency and the security of information shared among trading partners.
“When adopted at scale, the solution has the potential to save the industry billions of dollars,” said a joint official release.
The partners intend to work with a network of shippers, freight forwarders, ocean carriers, ports, and customs authorities to build the new global trade digitization solution, which is expected to go into production later this year.
The solution is designed to help reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management, and ultimately reduce waste and cost, the statement said.
The costs associated with trade documentation processing and administration are estimated to be up to one-fifth the actual physical transportation costs. A single vessel can carry thousands of shipments, and on top of the costs to move the paperwork, the documentation to support it can be delayed, lost or misplaced, leading to further complications.
Maersk found in 2014 that just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different interactions and communications among them.
Pilot testing
To prove the potential value of a commercial trade digitization solution, IBM and Maersk have worked with a number of trading partners, government authorities, and logistics companies. For example, goods from Schneider Electric were transported on a Maersk Line container vessel from the Port of Rotterdam to the Port of Newark in a pilot with the Customs Administration of the Netherlands under an EU research project.
Others participating in the pilot are the U.S. Department of Homeland Security Science and Technology Directorate and the U.S. Customs and Border Protection, along with Damco, Maersk’s supply chain solutions company.
“As a global integrator of container logistics with the ambition to digitize global trade, we are excited about this cooperation and its potential to bring substantial efficiency and productivity gains to global supply chains, while decreasing fraud and increasing security,” said Ibrahim Gokcen, chief digital officer of Maersk.
“The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.”
Benefits of blockchain
Blockchain, an immutable, security-rich, and transparent shared network, provides each participant end-to-end visibility based on their level of permission. The solution enables the real-time exchange of original supply chain events and documents through a digital infrastructure, or data pipeline, that connects the participants in a supply chain ecosystem. This promotes sustainable transport by integrating shipping processes and partners, and establishing evaluation frameworks through increased transparency and trusted access.
For shippers, the planned solution can help reduce trade documentation and processing costs and help eliminate delays associated with errors in the physical movement of paperwork. It will also provide visibility of the container as it advances through the supply chain.
For customs authorities, the solution is intended to give real-time visibility, significantly improving the information available for risk analysis and targeting, which may eventually lead to increased safety and security as well as greater efficiency in border inspection clearance procedures.
“We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done,” said Bridget van Kralingen, senior vice president of industry platforms at IBM.
The solution is based on Linux Foundation’s open-source Hyperledger Fabric. It is expected to be widely available to support multiple parties across the ocean shipping industry ecosystem later this year. IBM hosts the solution on the IBM cloud and the IBM high-security business network, delivered via IBM Bluemix.
Photo courtesy of IBM
