Transport and logistics giant A.P. Moller-Maersk and IBM, a blockchain, supply chain, and interoperability solutions provider, announced January 16 plans to establish a joint venture (JV) to provide more efficient and secure methods for conducting global trade using blockchain technology.
The new company aims to offer a jointly developed global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem. It will address the need for more transparency and simplicity in moving goods across borders and trading zones.
The cost and size of the world’s trading ecosystems continues to grow more complex, Maersk said in an emailed statement. More than US$4 trillion in goods are shipped each year, and more than 80% of the goods consumers use daily are carried by the ocean shipping industry. Trade documentation required to process and administer many of these goods can cost up to an estimated one-fifth of the actual physical transportation costs.
“According to The World Economic Forum, by reducing barriers within the international supply chain, global trade could increase by nearly 15 percent, boosting economies and creating jobs,” said Maersk.
What is blockchain?
A distributed ledger technology, blockchain establishes a shared, immutable record of all the transactions that take place within a network and then enables permissioned parties access to trusted data in real time.
By applying the technology to digitize global trade processes, a new form of command and consent can be introduced into the flow of information, empowering multiple trading partners to collaborate and establishing a single shared view of a transaction without compromising details, privacy, or confidentiality.
Maersk and IBM will use blockchain technology to power the new platform, as well as employ other cloud-based open source technologies including artificial intelligence, Internet of Things, and analytics, delivered via IBM Services, in order to help companies move and track goods digitally across international borders.
Manufacturers, shipping lines, freight forwarders, port and terminal operators and customs authorities can all benefit from these new technologies—and ultimately consumers, said the statement.
“This new company marks a milestone in our strategic efforts to drive the digitization of global trade. 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, chief commercial officer at Maersk and future chairman of the board of the new joint venture.
“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 vice president, IBM Global Industries, Solutions and Blockchain.
“Our joint venture with Maersk means we can now speed adoption of this exciting technology with the millions of organizations 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,” she added.
Attracting the interest of global firms
IBM and Maersk began a collaboration in June 2016 to build new blockchain- and cloud-based technologies. Since then, said Maersk, 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 the U.S. Customs and Border Protection.
The JV will now enable IBM and Maersk to commercialize and scale their solutions to 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, Procter and Gamble, and Agility Logistics, it added.
Additional customs and government authorities, including Singapore Customs and Peruvian Customs, will explore collaborating with the platform to facilitate trade flows and enhance supply chain security, said Maersk.
The global terminal operators APM Terminals and PSA International will use the platform to enrich port collaboration and improve terminal planning. With support from Guangdong Inspection and Quarantine Bureau by connecting to its Global Quality Traceability System for import and export goods, the platform can also link users to important trade corridors in and out of China.
To address the specific needs of the industry, Maersk and IBM are establishing an advisory board of industry experts to help further shape the platform and services, provide guidance and feedback on important industry factors, and drive open standards.
Initial core capabilities
The new company initially plans to commercialize two core capabilities aimed at digitizing the global supply chain from end-to-end.
One of these is a shipping information pipeline that will “provide end-to-end supply chain visibility to enable all actors involved in managing a supply chain to securely and seamlessly exchange information about shipment events in real time.”
The other is paperless trade that 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.
Maersk said the establishment of the joint venture remains subject to regulatory approvals. Once cleared, the JV, to be headquartered in New York, is expected to start operating within six months. Michael J. White, former president of Maersk Line in North America, has been named CEO of the new company.
