No more mountains of paperwork? Global supply chain to be bolstered by blockchain joint venture
A joint venture between IBM and shipping giant Maersk will use blockchain in the movement and shipment of goods around the world.
The idea is that the venture will provide shipping companies, ports, customs officials and even banks with a single shared and trusted view of supply chain transactions.
The two firms say this is needed, because at the moment keeping track of shipments is hampered by antiquated, costly and inefficient processes. An example of this is the manual movement of paper documentation in order to clear goods for export or import, customs approval and payments.
The IBM and Maersk joint venture will therefore provide more efficient and secure methods for conducting global trade using blockchain technology. It seeks to “jointly developed global trade digitisation platform built on open standards.”
This includes using blockchain to help shipping companies and traders move and track their goods across international borders digitally, with greater transparency, security, efficiency and simplicity. Blockchain will be able to provide a trusted view of supply chain transactions and could even eliminate the need for pen and paper, and replace it with a digital process for documents.
Trading of course is a vital industry. Indeed, 80 percent of the goods consumers use daily are carried by the ocean shipping industry, and more than $4 trillion in goods are shipped around the world each year.
But the downside is the costs associated with the required trade documentation to process and administer many of these goods is estimated to reach one-fifth of the actual physical transportation costs.
So anything that can reduce this cost, will have a positive effect.
Blockchain is mostly associated with banks and financial systems, as it is a digital technology for recording and verifying transactions. Until recently, it was mostly associated as the global online ledger that underpins the bitcoin digital currency.
IBM has already predicted that most banks will adopt blockchain, but blockchain is also suited to other industries, including the shipping industry which operate large networks of disparate partners
“A distributed ledger technology, blockchain establishes a shared, immutable record of all the transactions that take place within a network and then enables permissioned parties access to trusted data in real time,” said the two firms. “By applying the technology to digitise global trade processes, a new form of command and consent can be introduced into the flow of information, empowering multiple trading partners to collaborate and establishing a single shared view of a transaction without compromising details, privacy or confidentiality.”
Maersk and IBM will use blockchain technology to power the new platform, as well as employ other cloud-based open source technologies including artificial intelligence (AI), IoT and analytics, delivered via IBM Services, in order to help companies move and track goods digitally across international borders.
“This new company marks a milestone in our strategic efforts to drive the digitization of global trade,” said Vincent Clerc, chief commercial officer at Maersk and future chairman of the board of the new joint venture. “The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit.”
“By joining our knowledge of trade with IBM’s capabilities in blockchain and enterprise technology, we are confident this new company can make a real difference in shaping the future of global trade.”
“The major advances IBM has made in blockchain have shown that the technology can foster new business models and play an important role in how the world works by building smarter businesses,” added Bridget van Kralingen, senior VP IBM Global Industries, Solutions and Blockchain.
“Our joint venture with Maersk means we can now speed adoption of this exciting technology with the millions of organisations who play vital roles in one of the most complex and important networks in the world, the global supply chain. We believe blockchain will now emerge in this market as the leading way companies seize new untapped economic opportunities.”
It should be noted that IBM and Maersk had already begun a collaboration in June 2016 to build new blockchain- and cloud-based technologies.
Since then, multiple parties have piloted the platform including DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands, US Customs and Border Protection.
The as yet unnamed joint venture will be headquartered in the New York metropolitan area, and upon regulatory clearance, solutions are expected to become available within a six month period.
This is not the first time that IBM has partnered up with another party for In August last year IBM rolled out an enterprise-ready blockchain offering, as well as collaborations aimed at developing blockchain for food safety and automated billing.