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IBM and Maersk to integrate blockchain into container shipping ecosystem

IBM and Maersk have announced a new collaboration to use blockchain technology to improve operations in the global supply chain by increasing data transparency and information sharing.

{mprestriction ids="1,2"}The blockchain system to be used is based on the Linux Foundation’s open source Hyperledger Fabric and built by IBM and Maersk. The companies say that the technology will be made available to the shipping and logistics industry with the aim of helping to manage and track the paper trail of tens of millions of shipping containers across the world by digitising the supply chain process from end-to-end.

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 digitisation system, which is expected to go into production later this year. When adopted at scale, the partners believe that the system has the potential to save the industry billions of dollars.

The technology is being designed to help reduce fraud and errors, minimise 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 simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organisations, including more than 200 different interactions and communications among them. In order to prove the potential value of a commercial trade digitisation system, IBM and Maersk have worked with a number of trading partners, government authorities and logistics companies to investigate how the technology could be applied.

For example, goods from Schneider Electric were transported on a Maersk Line container vessel from the Port of Rotterdam to the Port of Newark in a pilot with the Customs Administration of the Netherlands under an EU research project. The US Department of Homeland Security Science and Technology Directorate, and US Customs and Border Protection are also participating in this pilot.

Damco, Maersk’s supply chain solutions company, supported origin management activities of the shipment while utilising the system. The international shipment of flowers to Royal FloraHolland from Kenya, Mandarin oranges from California, and pineapples from Colombia were also used to validate the system for shipments coming into the Port of Rotterdam.

“As a global integrator of container logistics with the ambition to digitise 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.”

Blockchain is hoped to be able to reduce administrative work in shipping documentation by providing an immutable, secure and transparent shared network, that will provide each participant with end-to-end visibility of transport data based on their level of permission.

Each participant in a supply chain ecosystem can view the progress of goods through the chain, to see where a container is in transit, inspect the status of customs documents, or view bills of lading and other data. Detailed visibility of the container’s progress through the supply chain can be improved by the real time exchange of original supply chain events and documents.

An important element of the blockchain technology is that no one party can modify, delete or even append any record without the consensus of others on the network, creating a level of transparency that should help to reduce fraud and errors, improve inventory management and speed up the entire process.

This will also be supplemented by the use of an industry standard API for the centralised sharing of data and shipping information via the Cloud, originally conceived by Frank Heijmann, head of trade relations at the Customs Administration of the Netherlands, and David Hesketh, head of customs research and development at HM Revenue and Customs in the UK, and further developed under the European Union’s FP7 CORE demonstrator project.

“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 recognised the opportunity for blockchain to potentially provide massive savings when used broadly across the ocean shipping industry ecosystem.”

“Bringing together our collective expertise, we created a new model the industry will be able to use to help improve the transparency and efficiency of delivering goods around the globe.”

Once it is made available to the ocean shipping industry ecosystem later this year, IBM will host the system on the IBM Cloud and the IBM high-security business network, delivered via IBM Bluemix.{/mprestriction}

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