Digital accounting powerhouse IBM and global shipping giant Maersk are launching a New York-based company that will focus on blockchain technology for tracking worldwide shipping. Maersk will take the lead on the new project, still unnamed, with 51 percent of ownership, and IBM currently owning the other 49 percent. Maersk’s former President of North American Operations, Michael White, will be heading up the new corporation as CEO.
Shaving the Costs of Global Shipping
The new corporation will concentrate on saving time and money for shippers and the long lists of people involved in tracking freight and monitoring damage or theft. Lost or delayed paperwork, resulting in spoiled or misplaced goods, actually accounts for over a fifth of the cost of shipping. There are also huge costs in both time and labor when shipping overseas. At every stop in port, customs offices, safety inspections, loading docks, ship deck, trains, trucks, holding and every other stage of handling, a new set of documents must be created, collated with existing paperwork and signed off.
Blockchains Offer Significant Savings Through Decentralization
The software offered by the new IBM/Maersk company is based on IBM’s Hyperledger Fabric 1.0, donated to the Linux Foundation by IBM and currently maintained by the Hyperledger Group. Blockchain technology, recently made famous as the basis for security and tracking of Bitcoin and other cryptocurrencies, offers hope for shippers and other industries such as insurance that have huge documentation and tracking requirements.
Current processes require dozens and sometimes hundreds of people to check with each other, central authorities and both ends of the supply chain to be able to sign off on their stages of the process. Blockchains can inherently keep track of each stage, update and check them against other stages, and inform each stage of the results of these checks. What this means in relation to shipping is that physical documents can now be replaced with digital versions, and can be checked, updated and moved to the next stage in seconds.
Dock inspectors, loading foremen, ship officers and the like no longer need to check with originators, receivers and certifying authorities, because the blockchain that tracks each transaction has already done the updating of each stage as it becomes necessary.
Shipping Only Scratches The Surface of New Potential
The single greatest reward to blockchain technology for transaction tracking is the savings in labor. Supply chains are easier and faster to monitor. Because of tamper-proof security, it takes less time to check for pilfering. Any changes can be monitored simultaneously by every stage of the process. Together, these advantages in time savings can add up to trillions of dollars in the shipping industry alone, according to a 2013 study by the World Economic Form. But the bonuses don’t end there.
Both IBM and Maersk have already run multiple large-scale tests of blockchain technology with partners such as Nestle, Unilever and Walmart with IBM, checking food safety and tracking inventory through the entire supply chain. For its part, Maersk has run trials involving marine insurance with major players such as Microsoft.
Regulatory approval for the new IBM/Maersk partnership to begin operations is expected by spring, according to CEO Michael White.
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