The blockchain is a trending term that first emerged in 2008, and is at the foundation of Bitcoin. It is a type of secure, shared database that has received considerable interest from the financial sector, and is now gaining traction in supply chain applications. In a nutshell, each link of the supply chain journey creates a block of information, which is joined to the other blocks, to form a chain. The previous records cannot be altered, but according to agreements made, other participants can view information from all the other participants. It provides a basis for complete supply chain visibility, subject to data captured and contractual arrangements among trading partners with respect to the data to be shared.
With this in mind, IBM and Maersk, the global logistics provider, will be providing a blockchain-based service to the shipping and logistics industry. The 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 highly secure sharing of information among trading partners. When adopted at scale, the solution has the potential to save the industry billions of dollars, according to the providers.
Ninety percent of goods in global trade are carried by the ocean shipping industry each year. 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 contribute to reducing 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 single 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.
Several trials have been run. For example, goods from Schneider Electric were transported on a Maersk Line container vessel from the Port of Rotterdam to the Port of Newark. 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.”