IBM and Maersk have teamed up to build a blockchain network to improve container shipping, a project that could save the entire industry billions of dollars every year.
IBM estimates that blockchain, if incorporated successfully, could save the container shipping industry billions of euros annually. It will do this by managing and tracking the trail of tens of millions of containers that constantly navigate the waves.
To prove this, the company has partnered with global shipping giant Maersk to trial a blockchain project.
It’s going big, too, with plans for up to 10m of Maersk’s containers to be managed by blockchain by the end of 2017. This will represent one in seven of the company’s entire haul.
Extrapolate those figures out a bit and you see the true scale of this plan, with up to 90pc of goods in global trade carried across the oceans every year.
The duo intend to work with all stakeholders in the shipping industry (freight forwarders, ocean carriers, ports etc) to build a global digitisation solution, which is expected to go into production later this year.
The solution will help to manage and track the paper trail of tens of millions of shipping containers, by digitising the entire supply chain process to enhance transparency and security of sharing information among trading partners.
“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 IBM’s Bridget van Kralingen.
The way it works, on the face of it, is simple. Blockchain provides each participant end-to-end visibility, based on their permission status. This allows stakeholders to see where containers are, and at what stage their documentation process is at.
The latter element is a big issue in shipping. Maersk found in 2014 that a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organisations, including more than 200 different interactions and communications.
Through blockchain, no one party can modify, delete or even append any record without the consensus from others on the network. This level of transparency helps to reduce fraud and errors; reduce the time products spend in the transit and shipping process; improve inventory management; and, ultimately, reduce waste and cost.
“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 at Maersk – a company that has been innovating its network for some time now.
“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.”