Technology is revolutionizing, but shipping is still in place. From signing the contract to port coordination, today’s shipping still requires a lot of paperwork.
Inefficiencies and high costs Although common in this industry, not all China Logistics companies are moving forward. Maersk is holding hands with IBM to explore the application of blockchain in shipping, hoping to set a new digital standard for global trade.
Earlier on Wall Street Mentioned earlier, start-up transport company Flexport has raised over 200 million U.S. dollars with its digital advantage.
Latest news shows that veteran shipping giant Maersk, is hand in hand to set up a new company IBM, which aims to commercialize the blockchain technology to help track the whole process of shipping, to help enhance the safety of the shipping process and paperless degree. Maersk will hold 51%, IBM accounted for 49%.
Blockchain technology is ahead of the traditional shipping model in terms of real-time dynamics, transparency, security and cost. From the customer to the company, real-time transportation information can be mastered and adjusted when needed; some files can also be digitized to reduce paper-based hassles.
Transaction information needs to be encrypted in the blockchain to enhance the security of the system. Last June’s ransomware NotPetya network attack cost Maersk hundreds of millions of dollars.
“Even a small improvement can have a huge impact on global trade.” Marie Wieck, general manager of IBM’s blockchain team, said many shipping supply chains are now dominated by middlemen, losing goods or delaying the perishable perishable food, The cost of shipping can be up to one-fifth of the total cost.
IBM and Maersk’s blockchain collaboration will be based on Hyperledger Fabric 1.0, an open-source blockchain distributed led by the Linux Foundation. IBM predicts that the new company will begin selling software in the third quarter of this year upon regulatory approval.
Everyone can participate in the blockchain technology to reduce the barriers of the entire shipping market, market competition may increase. Both companies emphasize that newly formed joint ventures will be global and can also engage with competitors of similar systems. They added, hoping to provide a standard for digitalization of the supply chain.
IBM and Maersk open the first blockchain test in 2016. At that time they tracked a group of flowers shipped from Kenya to the Netherlands. Since then, Maersk and IBM began exploring blockchain applications with DuPont, Dow Chemical, and a number of ports and customs.
“We saw an opportunity to increase freight sales and timeliness,” said Michael J. White on Fortune. Michael J. White will be CEO of the joint venture between Maersk and IBM, having previously served as North American president in Maersk Container Shipping.