“What’s important is not technology in itself, but how we use it…” I read somewhere, and apparently, IBM has got this number down. The world-wide technology leader and its groundbreaking Blockchain solution have landed on the maritime industry to provide a much needed paper trail solution: transaction digitalization.
The technology digitizes the supply chain process, allowing all relevant actors involved in maritime transport keep close track of essential documentation on line. The blockchain solution will be made available to the shipping and logistics industry, and will help manage and track the paper trail of tens of millions of shipping containers across the world. When adopted at scale, the solution has the potential to save the industry billions of dollars.
Digital era in the maritime world
Cost reduction is a big issue in all industries, world-wide. Many businesses are struggling to make ends meet and, what’s worse, some can’t manage this simple-looking task. There’s only so much you can save before you begin to tap into operational costs that just can’t be reduced any further. That’s when the importance of technology kicks in.
At first it may mean a larger investment, but in the long run savings are significant. 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.
IBM’s supply chain solution 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.
In order to prove the potential value of a commercial trade digitization solution, IBM and Maersk have worked with a number of trading partners, government authorities and logistics companies.
A happy family
“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,” reads a release on the IBM website.
“As a global integrator of container logistics with the ambition to digitize 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.
Shippers will also benefit from the network, as the solution can help reduce trade documentation and processing costs and help eliminate delays associated with errors in the physical movement of paperwork. It will also provide visibility of the container as it advances through the supply chain. For customs authorities, the solution is intended to give real time visibility, significantly improving the information available for risk analysis and targeting, which may eventually lead to increased safety and security as well as greater efficiency in border inspection clearance procedures.
The solution developed by Maersk and IBM is based on the open source Linux Foundation's open source Hyperledger Fabric. The solution is expected to be widely available to support multiple parties across the ocean shipping industry ecosystem later this year.
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