Two of the major players in their fields has into corporation, Which will bring blockchain technology to new heights when it comes to Global trading. It is aimed towards improving the cost of transportation and transparency. And is it a clear advantage over a paper-based process.
A new joint venture
In January 2018 Maersk and IBM, Announced The intention to establish a joint venture, which is aimed at providing an efficient and secure system for conducting global trade applying blockchain technology.
This is an ideal match because IBM is one of the leading big corporations researching and investing into blockchain development, so they have a lot of funds already involved in blockchain technology, which means they have a lot of knowledge already gained and the people employed which can put this knowledge to use.
Maersk if you don’t really know this company you might know their logo, this is because Maersk is one of the leading logistics companies on a global scale, they don’t do door to door delivery, but instead, they do Warehouse to Warehouse delivery on a massive scale, using ships trains and trucks.
Currently, the platform is being tested on some partners who are interested in the development of a smarter process for trade and logistics, but the goal is to have a fully open platform whereby all global supply chain companies can participate. But before they can begin to work entirely, they are still awaiting regulatory approval for the establishment of the joint venture.
A better way
The estimated annual cost of 1.8 trillion dollars is what we are looking at when we look at global trade, And since the worldwide trading ecosystem is only going to grow, we need a system which is efficient and easy to use and the aim for the Maersk-IBM joint venture is a 10% efficiency increase. A 10% efficiency increase on the is not much as we see continued growth, once the system is developed it is easy to imagine that further development of the system will go on to heighten the efficiency impact.
In today’s global trading markets you have multiple platforms managing different aspects of the market. And some of the systems might be talking to each other, but a real-life example is that I have recently had to order a large piece of medical equipment for work. And even though our delivery company had a track and trace, It still took almost 60 days to get it from Japan to Denmark, and there were three things which held it up.
- In Japan, the exporter had forgotten to include one document for export of nuclear materials.
- Once it reached Europe it was delivered to a port in Germany where it waited for quite a while, don’t know why, But I do believe it has something to do with the nuclear materials in the product.
- Once it reaches Denmark, it could not get released until I had obtained one document from the exporter which stated that it was a medical product, as the border control officer state “this is because the product had Nuclear markings on the box”.
And by putting it all on the blockchain, all the required documents could follow the shipment online from sender to you. And the clearing process of any product would be faster, besides that another bonus if something is shipped with malicious Intent security agencies will be able to follow it and follow up on it.
The platform is designed with the intern to support the established supply chain ecosystems, The big difference is that it will be an information pipeline, throughout the entire supply chain making it visible what shipment is where.
Another significant benefit of the system is that it will be able to get rid of paper and thereby making import and export of goods paperless. Which will give a significant environmental improvement.
Some of the problems associated with the platform as we see it is security. To clarify a bit what we mean, it was the security around being able to send you a product from a company to a company without competitors knowing what you are sending and this could be done today with blockchain technology and cryptography. The significant obstacle is that different authorities needed to verify and authorise the shipment going through/into their country which also requires access. So it will be interesting to see how they deal with that problem.
Already being tested
Currently, there is a small list of companies already using the system, and it is still in beta version. But the list includes port authorities, border protection so we know they have thought about including the capability of government’s interacting with the blockchain so they can keep their product secure. The lists of the parties involved in I don’t think the program is:
- Dow Chemical.
- Tetra Pak.
- Port Houston.
- Rotterdam Port Community System Portbase.
- The Customs Administration of the Netherlands.
- U.S. Customs and Border Protection.
Besides that, a large group of companies have expressed an interest in using the platform in different ways amongst others we can name the company General Motors which is looking into organising it’s logistics through the platform.
If you want to know more, you can be their announcement right here