IBM digitises global shipping supply chain

Published on the 23/01/2018 | Written by Jonathan Cotton

IBM_Supply chain_Maersk shipping

Big Blue and Maersk look to reinvent logistics using blockchain...

IBM and Maersk are heavy hitters in their respective industries and their ambitions are high: In a new venture, the technology and shipping giants are looking to create a “global trade digitisation platform built on open standards and designed for use by the entire global shipping ecosystem.” That should, the companies contend, bring transparency and simplicity to shipping across borders and trading zones.

Initial plans are to commercialise two core capabilities: A shipping information pipeline, providing end-to-end supply chain visibility; and paperless trade, the digitisation and automation of paperwork filings via blockchain-based smart contracts. If the group can pull it off, there’s money to be made: Current systems rely on inefficient and error-prone manual processes, even though around US$4 trillion worth of goods are shipped each year, 80 percent by sea. As trading ecosystems continue to grow in complexity, documentation and administration costs grow too, sometimes swelling to one-fifth the cost of actual transport itself.

Rationalising such a large network of disparate partners is a challenge, but it is also a task to which blockchain technology is suited, creating as it does an immutable, shared record of all transactions within the network, a single shared view of each transaction, and the opportunity to collaborate in highly detailed and confidential ways.

In recent times, IBM has focused on increasing its blockchain capabilities, making extensive R&D investments in the technology. Last year, the tech giant announced a blockchain banking processing solution for universal cross-border payments aimed at reducing settlement times and lowering costs. They’ve also partnered with Nestle and Unilever for fast-moving consumer goods tracking and looked at data transfer solutions for the healthcare sector. Moreover, a recent Juniper report placed IBM at the top of the international heap for blockchain credentials.

The World Economic Forum has said that reducing ‘friction’ within the international supply chain should be a priority, estimating that more efficient global supply chain management could result in global trade increases of nearly 15 percent, boosting economies and creating jobs.

“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 CCO – and future chairman of the board of the new joint venture.

“By joining our knowledge of trade with IBM’s capabilities in blockchain and enterprise technology, we are confident this new company can make a real difference in shaping the future of global trade.”

The project has been running since June 2016 and has so far been piloted by companies such as DuPont, Dow Chemical, Tetra Pak and U.S. Customs and Border Protection, among others. Customs and government authorities including Singapore Customs and Peruvian Customs have also indicated they are open to trialling the platform.

IBM said the solution will incorporate artificial intelligence and IoT in order to digitally track goods across international borders.

“The major advances IBM has made in blockchain have shown that the technology can foster new business models and play an important role in how the world works by building smarter businesses,” said Bridget van Kralingen, senior VP, IBM Global Industries, Solutions and Blockchain.

“We can now speed adoption of this exciting technology with the millions of organisations who play vital roles in one of the most complex and important networks in the world, the global supply chain.”

“We believe blockchain will now emerge in this market as the leading way companies seize new untapped economic opportunities.”

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