MARCH 6, 2017 — IBM (NYSE: IBM) and Maersk are to collaborate to use blockchain technology to help help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process.
What's a blockchain?
"The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value," the website blockgeeks.com says, quoting Don & Alex Tapscott, authors of Blockchain Revolution (2016).
"Picture a spreadsheet that is duplicated thousands of times across a network of computers," says blockgeeks.com. "Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain."
The blockchain solution to be built by IBM and Maersk will be made available to the shipping and logistics industry. When adopted at scale, the solution is claimed to have the potential to save the industry billions of dollars.
IBM and Maersk 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. It has the potential to vastly reduce the cost and complexity of trading by using blockchain technology to establish transparency among parties. 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.
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.
In order 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 program with the Customs Administration of the Netherlands under an EU research project. The U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection are also participating in this pilot. Damco, Maersk's supply chain solutions company, supported origin management activities of the shipment while utilizing the solution. The international shipment of flowers to Royal FloraHolland from Kenya, Mandarin oranges from California, and pineapples from Colombia were also used to validate the solution for shipments coming into the Port of Rotterdam.
"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, 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."
The solution developed by Maersk and IBM is based on the open source Linux Foundation's open source Hyperledger Fabric. The solution 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.