Yesterday Maersk and IBM unveiled a new mutual project to develop a new solution based on blockchain technology to manage transactions between shipping lines, shippers, freight forwarders, ports and customs. The product is said to be available already later this year.
Applying innovative blockchain technology, known also as the basis for the Bitcoin virtual money, has become a new trend that may soon completely transform the shipping industry with its centuries-old practice of sending a paper bill of lading. Port.Today already wrote about Israeli start-up Wave, which together with Barklays Bank had successfully tested a method to transmit shipping documents using blockchain technology and intended to offer its product on the market in the first quarter of 2017.
The idea behind the solution is that a shipment of goods on its way from origin to destination can go through as many as 30 people and organizations, including more than 200 different interactions and communications among them. The costs of documentation processing and administration are estimated to be up to one-fifth the actual physical transportation costs. Besides, the paperwork can be delayed, lost, misplaced or forged, leading to further complications. International trading parties need a faster, more secure and efficient way to handle the documentation processes.
The solution enables the real time exchange of original supply chain events and documents through a digital infrastructure (data pipeline), that connects all the players of a supply chain system. Blockchain, an immutable, security rich and transparent shared network, provides each participant with end-to-end visibility based on their level of permission. Thus, each participant can view the progress of goods, understanding where a container is in transit, as well as see the status of customs documents, or view bills of lading and other data. Besides, all parties can transfer title and transmit shipping documents in real time and in an encrypted form, but no one can modify, delete or even append any record without the consensus from others on the network. This helps eliminate fraud and errors, promote sustainable transport by integrating shipping processes and partners, reduce transit times, improve inventory management and ultimately reduce costs.
According to the developers, the solution, when adopted at scale, has the potential to save the industry billions of dollars.
Aiming to prove the potential value of this global trade digitization solution, IBM and Maersk have made several pilot shipments, working together with a number of trading partners, government authorities and logistics companies. Thus, goods from Schneider Electric were transported on a Maersk Line container vessel from Rotterdam to Newark under an EU research project with the Customs Administration of the Netherlands, with Damco, Maersk’s supply chain solutions company, supporting origin management activities. The U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection also participated in this pilot. Shipments 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.
Ibrahim Gokcen, Maersk chief digital officer, said: «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. 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. »
The blockchain solution of IBM and Maersk is based on the Linux Foundation’s open source Hyperledger Fabric.