Technology firm IBM and shipping company Maersk have teamed up to produce a logistics platform based on blockchain for the global freight industry. The product, based on Hyperledger Fabric, gives companies a digital system to manage and track the documentation involved in moving shipping containers around the world. IBM and Maersk said that 90 per cent of goods moved around the globe are shipped using tens of millions of shipping containers each year.
Pilots for the product have already been carried out with trading partners, government authorities and logistics companies to prove its commercial value. IBM and Maersk will seek collaboration with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities before developing a final scalable product later this year.
Simplifying the supply chain
Research conducted by Maersk in 2014 found that just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organisations, including more than 200 different interactions and communications among them. Digitally managing this communication and the exchange of documentation will smooth the processing of goods through each check point.
Massive savings for shipping industry
The Hyperledger Fabric used in the IBM/Maersk product is an open source network using the blockchain platform developed by the Linux Foundation and incorporating work from IBM's OpenBlockchain. IBM's Bridget van Kralingen said: “Working closely with Maersk for years, we've long understood the challenges facing the supply chain and logistics industry and quickly recognised the opportunity for blockchain to potentially provide massive savings when used broadly across the ocean shipping industry ecosystem. Bringing together our collective expertise, we created a new model the industry will be able to use to help improve the transparency and efficiency of delivering goods around the globe.”
It's also fitting that the use of distributed ledger technology (DLT) is being applied in an industry-wide context in the global shipping business, since blockchain technology is sometimes explained using the metaphor of shipping containers. Whereas in the past goods would be loaded aboard transport vehicles by hand in boxes or crates, the invention of the shipping container in 1956 (attributed to Malcolm McLean) meant that goods could be handled far less and could be boarded quickly onto ships, greatly reducing the cost of handling and the risk of theft/breakage. This principle applies to DLT, where each 'block' contains a set of data, which is integral and can only be modified with the consent of all participants in the chain.
Other financial uses for blockchain
This development represents one of the many practical uses for blockchain in the world of financial services and trade finance. This blog post by ACI Worldwide's Paul McMeekin looks at all the other financial uses for distributed ledger technology. As you can see by the graphic used by Paul, supply chain documentation is just one of the possibilities for blockchain and it falls into the “record keeping” category.
Other use-cases include smart contracts, securities, and digital currency & fraud reduction. Paul goes into more detail about each of these use-cases in his blog. With products such as the IBM/Maersk initiative becoming available by the end of 2017, the development of blockchain solutions is set to get interesting before the end of the year.
Blockchain could save banks $12 billion a year
2017 is already showing signs of how blockchain will develop and shape financial services in the near future, with trade finance platforms and huge savings for financial institutions
Blockchain security remains major concern for banks
A report from Greenwich Associates looks at how distributed ledger technology is being adopted by organisations involved in capital markets.
Blockchain will “fundamentally alter” global finance
A report from the World Economic Forum says that blockchain “will fundamentally alter the way financial institutions do business around the world”.