A.P. Moller-Maersk and IBM have announced their intent to establish a joint venture (JV) to provide more efficient and secure methods for conducting global trade using blockchain technology.
The pair of companies had already begun working on a blockchain project in June 2016 while other transport and logistics providers including PSA, the Port of Rotterdam and Hyundai Merchant Marine (HMM) have also trialled the benefits of the technology.
The JV will enable Maersk and IBM to commercialise and scale their solutions to a range of corporations.
APM Terminals and PSA International will use the platform in a bid to enhance port collaboration and improve terminal planning.
Customs and government authorities, including Singapore Customs and Peruvian Customs, will explore collaborating with the platform to facilitate trade flows and enhance supply chain security.
The aim of the new company will be to offer a jointly developed global trade digitisation platform built on open standards and designed for use by the entire global shipping industry.
It will address the need to provide more transparency and simplicity in the movement of goods across borders and trading zones, noted a statement from the Danish company.
More than US$4tn in goods are shipped each year, and more than 80% of the goods consumers use daily are carried by the ocean shipping industry.
The maximum cost of the required trade documentation to process and administer many of these goods is estimated to reach one-fifth of the actual physical transportation costs.
According to The World Economic Forum, by reducing barriers within the international supply chain, global trade could increase by nearly 15 percent, boosting economies and creating jobs.
A statement from Maersk claimed that the attributes of blockchain technology are ideally suited to large networks of disparate partners.
A distributed ledger technology, blockchain establishes a shared, immutable record of all the transactions that take place within a network and then enables permissioned parties access to trusted data in real time.
The idea is to enable trading partners to collaborate via a single shared view of a transaction without compromising details, privacy or confidentiality.
Maersk, and IBM will use blockchain technology to power the new platform, as well as employ other cloud-based open source technologies including artificial intelligence (AI), internet of things (IoT) and analytics, delivered via IBM Services, to help companies move and track goods digitally across borders.
Vincent Clerc, chief commercial officer at Maersk and future chairman of the board of the new joint venture, said: “The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit.”
Bridget van Kralingen, senior vice president, IBM Global Industries, Solutions and Blockchain, stated: “Our joint venture with Maersk means we can now speed adoption of this exciting technology with the millions of organisations who play vital roles in one of the most complex and important networks in the world, the global supply chain.”
Maersk and IBM have named Michael J. White, former president of Maersk Line in North America, as CEO of the new company.
He stated: “Today, a vast amount of resources are wasted due to inefficient and error-prone manual processes.
“The pilots confirmed our expectations that, across the industry, there is considerable demand for efficiency gains and opportunities coming from streamlining and standardising information flows using digital solutions.”
The new company initially plans to commercialise two core capabilities, the first being a “shipping information pipeline” which will provide end-to-end supply chain visibility.
The second is “paperless trade” which will digitise and automate paperwork filings by enabling end-users to securely submit, validate and approve documents across organisational boundaries
Upon regulatory clearance, solutions from the joint venture are expected to become available within six months.
The new company will be headquartered in the New York metropolitan area.