IBM and Maersk have announced a new collaboration to use blockchain technology based on the Linux Foundation’s open source Hyperledger Fabric to help transform the global, cross-border supply chain.
The blockchain solution, built by IBM and Maersk, will be made available to the shipping and logistics industry. IBM hosts the solution on the IBM Cloud and the IBM high-security business network, delivered via IBM Bluemix.
According to IBM, 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, IBM says.
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 digitization solution, which is expected to go into production later this year. IBM says 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. Maersk found in 2014 that just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different interactions and communications among them.
“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,” said Ibrahim Gokcen, chief digital officer at Maersk. “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.”
“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,” said Bridget van Kralingen, senior VP of Industry Platforms at IBM.
Improved workflow and real time visibility
International trading parties require both improved workflow and better visibility. They need a faster, security rich and more efficient way to handle the documentation processes needed to move goods across international borders.
The costs associated with trade documentation processing and administration are estimated to be up to one-fifth the actual physical transportation costs. A single vessel can carry thousands of shipments, and on top of the costs to move the paperwork, the documentation to support it can be delayed, lost or misplaced, leading to further complications.
How it works:
- Blockchain, an immutable, security rich and transparent shared network, provides each participant end-to-end visibility based on their level of permission.
- 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.
- 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.
- No one party can modify, delete or even append any record without the consensus from others on the network.
- This level of transparency helps reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management and ultimately reduce waste and cost.
The solution enables the real time exchange of original supply chain events and documents through a digital infrastructure, or data pipeline, that connects the participants in a supply chain ecosystem. This promotes sustainable transport by integrating shipping processes and partners, and establishing evaluation frameworks through increased transparency and trusted access.
The Hyperledger project, the cross-industry open source blockchain group that is developing Hyperledger Fabric, has said it plans to release its first production-ready Hyperledger Fabric code base by the end of this month.