IBM and Maersk have announced a new, as yet unnamed, joint venture to develop blockchain technology solutions for maritime shipping. The New York-based company will be 51% owned by Maersk and 49% by IBM. The company will create products to help shippers, ports, custom offices, banks, and other participants in global supply chains track freight as well as replace cumbersome and inefficient documentation processes with an immutable distributed ledger.
FreightWaves covered IBM-Maersk’s 2016 pilot that moved a blockchain-powered shipment of flowers from Mombasa, Kenya, to Rotterdam, Netherlands, in an article about Israeli container shipper ZIM’s trial of blockchain bills-of-lading. Now IBM and Maersk have taken a substantial step forward and have formed a collaborative business.
“We see an opportunity to increase efficiency and timeliness for cargo movement,” said Michael J. White, the new company’s CEO. White previously served as the North American president for Maersk Line, Maersk’s shipping container division. White said that “today, a vast amount of resources is wasted due to inefficient and error-prone manual processes.” “Even small improvements can have a substantial impact on global trade,” added Marie Wieck, general manager of IBM’s blockchain team.
A 2013 report by the World Economic Forum found that removing supply chain barriers to international trade would increase GDP growth faster than removing tariffs. The WEF identified major inefficiencies in customs administration, import-export procedures including the coordination between border agencies, the transparency of border administration, and problems with the availability and use of information and communications technology. Specifically, the WEF said that “Reducing supply chain barriers to trade could increase global GDP by 5% and trade by 15%.” The new company formed by IBM and Maersk seemingly intends to do just that.
Globally, more than $4T in goods are shipped in all modes per year, and 80% of the goods consumers use daily are carried by the ocean shipping industry. Mikkel Elbek Linnet, Maersk’s senior press officer, wrote that “the maximum cost of the required trade documentation to process and administer many of these [container-shipped] goods is estimated to reach one-fifth of the actual physical transportation costs.” Inefficiencies in the current manual, paper-based documentation processes include inconsistencies in information across organizational boundaries and ‘blind spots’ throughout the supply chain; complex, cumbersome, and costly peer-to-peer messaging; and clearance processes subject to fraud.
“The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit,” said Vincent Clerc, Maersk’s chief commercial officer who will serve as board chairman of the new joint venture, in a statement.
IBM and Maersk’s technology will be built on the Hyperledger Fabric 1.0, a blockchain platform developed by IBM and released last July that is now maintained by the Linux Foundation’s Hyperledger group.
“We are super excited that two of the largest and most important players in the market have joined forces to commercialize this technology. We are bullish on the outcome and look forward to working closely with the organization and others that are implementing blockchain applications in the freight and supply-chain sectors,” said Craig Fuller, Managing Director of the Blockchain in Transport Alliance (BiTA). BiTA is a trade alliance providing blockchain education and fostering the adoption of uniform standards for the implementation of blockchain technology in the transportation space.
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