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IBM & Maersk launch blockchain for cargo

In a move that could have profound implications for supply chain efficiency and visibility, IBM and Maersk have used a blockchain to manage cargo documentation for ocean freight shipments.

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The two companies have announced a “new collaboration to use blockchain technology to help transform the global, cross-border supply chain”. Using IBM’s open source Hyperledger, the two companies will develop a blockchain for the shipping and logistics industries. “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,” the announcement stated.
IBM and Maersk said they will work with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities to build the new blockchain, 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 help reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management and ultimately reduce waste and cost”.
Blockchain has the ability to act as a single, transparent source of record for all the commercial and regulatory information related to moving a container, which Maersk found in a 2014 exercise relating to a reefer shipment from East Africa to Europe can be as many as 30 groups and over 200 information exchanges.
IBM and Maersk have already conducted pilot projects, including shipping electronics for Schneider from Rotterdam to Newark as part of an EU research project, which involved Damco and the U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection. Other shipments including flowers to Royal FloraHolland from Kenya, Mandarin oranges from California, and pineapples from Colombia to 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. 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.”
One of the biggest disruptors blockchain stands to bring to shipping is in the area of visibility. A block chain is a fully transparent, shared network and IBM notes that “Each participant in a supply chain ecosystem can view the progress of goods through the supply chain, understanding where a container is in transit. They can also see the status of customs documents, or view bills of lading and other data”. In particular “Detailed visibility of the container’s progress through the supply chain is enhanced with the real time exchange of original supply chain events and documents”.
This could include, if the parties in the blockchain agree, sensor information from systems like shock sensors and reefer monitoring.
One of the big questions about blockchain is how data will be shared with regulatory authorities, who only need to see part of the information. In the Netherlands a standard API for the centralized sharing of data and shipping information via the cloud was originally conceived by Frank Heijmann, head of trade relations, Customs Administration of the Netherlands, and David Hesketh, head of customs research and development, HM Revenue and Customs, then further refined under the EU FP7 CORE demonstrator project.
“The Customs Administration of the Netherlands see the data pipeline as a tool supporting the balance between trade facilitation and enforcement, where information sharing in supply chains is optimized from a commercial perspective, and government authorities can re-use that information flow for supervision purposes,” said Heijmann.
“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 Bridget van Kralingen, senior vice president, Industry Platforms, IBM. “Working closely with Maersk for years, we’ve long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to potentially provide massive savings when used broadly across the ocean shipping industry ecosystem.”
The solution is expected to be widely available to support multiple parties across the ocean shipping industry ecosystem later this year. IBM hosts the solution on the IBM Cloud and the IBM high-security business network, delivered via IBM Bluemix.
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