Will the IBM-Maersk Blockchain platform solve the shipping industry’s traditional woes?

Will the IBM-Maersk Blockchain platform solve the shipping industry’s traditional woes?
The IBM-Maersk partnership has generated a lot of excitement in the global trade community. So, what is the project all about and what are the key areas that it addresses? Shashank Venkat presents the details  

Recently, tech giant IBM and business conglomerate Maersk announced their intentions to launch a new venture to facilitate global trade in a secure and efficient fashion with the help of Blockchain technology. The new joint entity aims to create an open and secure global trade platform which offers digital products and integration services. The ultimate objective is to provide more transparency and simplify the movement of goods.

According to estimates, more than $4 trillion worth of goods is shipped annually, making it one of the biggest industries in the world. The shipping industry alone accounts for 80% of the goods that consumers use every day across the globe, but the cost, size and complexity of the trading ecosystems across the globe continue to grow.  

However, just like any other big traditional industry, the shipping sector is plagued with inertia. The industry continues to grapple with manual paper-based processes and outdated systems to transmit information. In fact, it is estimated that the cost of the trade documentation alone is one-fifth of the physical transportation costs. Multiple intermediaries across the supply chain ecosystem also lead to inconsistent information flow and blind spots that hinder the efficient flow of goods. In addition, maritime fraud costs the industry a staggering $600 billion every year.

Blockchain technology seems to be the answer to these challenges. The technology lends itself very well to large networks with multiple nodes such as the shipping industry. Blockchain is essentially a distributed electronic ledger, which offers an immutable record of all transactions updated in real-time which can be accessed by permitted parties. By implementing it in global trade, participants can easily collaborate and track the movement of goods and eliminate the risk of fraud. Blockchain can readily help with areas such as supply chain transparency and goods verification. On a side note, newer projects such as Wabi are already doing some interesting things to help identify counterfeit goods.

The IBM-Maersk platform aims to connect the supply chain ecosystem by reducing trade barriers, enhancing efficiency and providing a global platform for containerised shipping. It will address two of the biggest challenges facing the industry: lack of real-time transparency in the supply chain, and complicated paper-based documentation processes. The platform will be designed to give end-to-end visibility in the global shipping information pipeline and facilitate paperless, digitalised trade.

This joint venture will bring together various stakeholders in the global supply chain – ports and terminals, ocean carriers, customs authorities, freight forwarders, shippers and other participants – on a secure platform for sharing information and developing digital products. Many leading industry names such as DuPont, Dow Chemical and Tetra Pak, among others, have already piloted the platform. The solutions from this joint venture are expected to be made available within six months, subject to regulatory approvals.

Technologies such as Blockchain, Artificial Intelligence and the Internet of Things are opening up exciting new possibilities within industries that have previously been reluctant to embrace change. These technological advances have given us a glimpse of a new technological era with newer business models, smarter transactions and completely digitalised ecosystems.

The IBM-Maersk project holds the potential to be a significant milestone towards the digital transformation of the shipping industry, not just streamlining existing processes and eliminating fraud, but also creating new monetisation opportunities throughout the supply chain. If the platform sees mass adoption, Blockchain could become the go-to technology not just for the shipping sector, but for supply chains in all industries. And that will truly be a game-changer for global businesses.