Danish shipping conglomerate A.P Moller–Maersk and IBM have been working together to build new blockchain- and cloud-based technologies for roughly 18 months. 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, and U.S. Customs and Border Protection.

 

IBM and Maersk have now formally announced they will establish a joint venture to provide more efficient and secure methods for conducting global trade using blockchain technology. The companies add that the digitization platform, built on open standards and designed for use by the entire global shipping ecosystem, will address the need to provide more transparency and simplicity in the movement of goods across borders and trading zones.

 

The joint venture enables IBM and Maersk to commercialize and scale their solutions for a broader group of global corporations, many of whom have already expressed interest in the capabilities and are exploring ways to use the new platform, including General Motors and Procter and Gamble to streamline the complex supply chains they operate, and freight forwarder and logistic company Agility Logistics to improve customer services such as customs clearance brokerage.

 

Additional customs and government authorities, including Singapore Customs and Peruvian Customs, have also expressed interest in exploring possible collaboration with the platform to streamline trade flow and enhance supply chain security, IBM reports. Global terminal operators APM Terminals and PSA International also expressed interest in using the platform to increase port collaboration and improve terminal planning. IBM also notes that with support from Guangdong Inspection and Quarantine Bureau—by connecting to its Global Quality Traceability System for import and export goods—the platform may also link users to important trade corridors in and out of China.

 

“Today, a vast amount of resources are wasted due to inefficient and error-prone manual processes,” says Michael J. White, former president of Maersk Line in North America, and CEO of the new company. “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 using digital solutions.”

 

Initial plans call for the new company to commercialize two core capabilities for digitizing the global supply chain from end-to-end. The first, IBM explains, is a shipping information pipeline to deliver end-to-end supply chain visibility so all supply chain partners can securely and seamlessly exchange information about shipment events in real time. Secondly, use of paperless trade will digitize and automate paperwork filings by enabling end-users to securely submit, validate and approve documents across organizational boundaries—ultimately helping to reduce the time and cost for clearance and cargo movement. Blockchain-based smart contracts ensure all required approvals are in place, helping speed up approvals and reducing mistakes, IBM notes.

 

“The big thing that’s missing from this industry to digitize and unleash the potential of the technology is really to create a form of utility that brings standards across the entire ecosystem,” Maersk’s Chief Commercial Officer Vincent Clerc said in an interview with Reuters. This solution will help manage and track tens of millions of shipping containers globally by digitizing the supply chain process from end to end, he explains.

 

Documentation and bureaucracy have been estimated to account for as much as a fifth of the total cost of moving a container. What are your thoughts on the use of blockchain to streamline this process? Secondly, what impact would visibility of goods as they cross borders and trade zones have on company’s supply chain?