Blockchain Global Shipping Platform Developed By Maersk Line, IBMbr>
Denmark-based shipping giant Maersk Line and IBM are establishing a new, jointly owned company to promote and sell a blockchain system for managing global shipping. The joint company is so far unnamed.
The company’s goal is to simplify the complex process of transporting goods across the worlds myriad of disparate trade zones. The company will use a blockchain platform developed by the two companies last year. The platform is designed to 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.
IBM said that multiple parties have already piloted the platform, including DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands, and US Customs and Border Protection.
The initial offering will include two blockchain options: a shipping information pipeline that provides a real-time, transparent view of merchandise movement and smart contracts that replace traditional paper-based processes. The platform will be made available to the shipping industry around mid-2018.
“The pilots confirmed our expectations that, across the industry, there is considerable demand for efficiency gains and opportunities coming from streamlining and standardizing information flows,” Michael J. White, CEO and former president of Maersk Line in North America. “Now this work has progressed to a point that a beta version involving all players of the ecosystem along a specific trade lane can be launched. That is why we intend to create the joint venture – to take these solutions to market.”
According to Maersk, more than $4 trillion in goods are shipped each year, and more than 80 percent of the goods consumers use daily are carried by the ocean shipping industry. The maximum cost of the required trade documentation to process and administer many of these goods is estimated to reach one-fifth of the actual physical transportation costs. By reducing barriers within the international supply chain, global trade could increase by nearly 15 percent, boosting economies and creating jobs.
“The objective of the platform is to connect and provide benefits to the supply chain ecosystem,” IBM said. “A global network of interconnected shipping corridors linking the ports and terminals, customs authorities, shipping lines, third-party logistics (3PLs), inland transportation, shippers and other actors, all together.”
Denmark-based shipping giant Maersk Line has been exploring possible use cases, seeking to reduce costs by using blockchain technology because its current surviving strategy reached the limit.
Founded in 1928, Maersk Line is the global container division and the largest operating unit of the Maersk Group, a Danish business conglomerate. It is the world’s largest container shipping company having customers through 374 offices in 116 countries. It employs approximately 7,000 sea farers and approximately 25,000 land-based people. Maersk Line operates over 600 vessels and has a capacity of 2.6 million TEU.
In March, Maersk partnered with IBM to apply the blockchain technology to its logistics systems. The companies developed a blockchain solution that is designed to 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.
The shipping giant said the blockchain solution can also cut costs as the risk of forgery and alteration of customs documents and receipts, which are required for the shipping process, is reduced. IBM estimates that the global container shipping and logistics market as a whole can save US$27 billion of costs a year by introducing the blockchain technology.
In September, Maersk, along with Microsoft, accounting firm EY, blockchain firm Guardtime and several insurance companies, completed a 20-week blockchain proof of concept (PoC) trial for marine insurance. The group trialed blockchain to capture information about shipments, risk and liability, and to help firms comply with insurance regulations.
Maersk said marine insurance has traditionally relied on physical contracts being shipped to and for, from one port to another, in order to be eventually signed. The PoC created a shared database that logs information about shipments, as well as potential risks, in order to help ships comply with insurance regulations. The database also ensured that this information is transparent across what is a complex network of variables.