On January 16, 2018 IBM and Maersk made a joint announcement that the two companies will work together on a project to provide a blockchain technology solution that simplifies payments for the global supply chain. This project aims to bring more transparency to the shipping industry and reduce global trade barriers. In turn, this could help to increase global trade volume by almost 15 percent. According to the official press release, “more than $4 trillion in goods are shipped each year, and more than 80 percent of the goods consumers use daily are carried by the ocean shipping industry.”
One of the reasons why this blockchain project is gaining a lot of attention is because of its large-scale vision. Unlike most blockchain projects seen to date, this isn’t a small project with a technology development plan that depends on the fundraising success of an ICO. IBM isn’t trying to make its own cryptocurrency yet. Instead, it is utilizing blockchain technology itself to deliver a market solution. The abundance of resources and large teams behind this project allow IBM and Maersk to deliver industry-wide technological innovations at scale.
How IBM/Maersk Will Work
Maersk conducted a test in 2016 too see how blockchain will change the future of the shipping industry. It shipped a single cargo container of roses from Kenya to the Netherlands using the traditional approval process. This led to the accumulation a stack of over 200 documented communications. This is why Maersk and IBM partnered to create smart contracts for the shipping industry.
IBM/Maersk smart contracts allow relevant parties on the supply chain to see other parties’ signatures and track where containers are along supply routes. This improved system of communication could lead to significant decreases in delays and fraud. Smart contracts for the shipping industry have so much potential because they can unify multiple parties that have historically had disjointed communication. Manufacturers, shipping lines, freight forwarders, port and terminal operators, and customs authorities can all be included on one platform. IBM’s blockchain, built on Hyperledger Fabric, will not only increase the efficiency of the global supply chain for Maersk but could also increase global GDP by five percent.
IBM/Maersk is not the only blockchain project focusing on smart contracts for the global supply chain. Waltonchain (WTC) and VeChain (VEN) are just two of many supply chain-focused cryptocurrencies already on the market. Waltonchain (WTC) is a Chinese-Korean blockchain project founded in November 2016. It utilizes a combination of blockchain and RFID technologies to change how clothing retailers track and store data to understand more about the popularity of their products. VeChain, a Singapore-based cryptocurrency project, offers a similar solution to improve the global supply chain. Even though its ICO only ended in August 2017, VeChain has already gained some significant adoption. It partnered with Direct Imported Goods (DIG), China’s largest importer of fine wines, to combat the issue of fake wine imports. VeChain also partnered with Renault, one of France’s top automobile manufacturers.
While these projects have yielded impressive results in a short amount of time, they are likely to face tough competition as the IBM/Maersk project continues to build momentum. Companies like DuPont, Dow Chemical, and Tetra Pak have already conducted tests utilizing this technology. General Motors and Procter and Gamble have also expressed interest in using the platform.
The thing that makes the IBM/Maersk project so compelling is that it also has been piloted by national governments and port authorities from around the globe. These include Port Houston, Rotterdam Port Community System Portbase, and U.S. Customs and Border Protection. In addition, Singapore Customs, Peruvian Customs, and China’s Guangdong Inspection and Quarantine Bureau have also expressed interest in using the platform. All of this early attention automatically makes IBM/Maersk one of the most anticipated blockchain projects to date.
Why IBM and Maersk Offer a Better Solution
The IBM and Maersk partnership is one example of a new wave of business opportunities created by cross-industry collaboration. More specifically, it is part of a larger trend to change the way that traditional industries operate. Companies must continue to innovate to remain competitive, but that certainly doesn’t mean that innovation is easy for every industry giant. Kodak is one company that struggled to iron out the details of its blockchain project and ICO. Its blockchain solution may not offer a solution that impacts the photography industry enough to gain significant adoption of its cryptocurrency, KODAKOne. In contrast, the IBM and Maersk project makes sense. The two companies are working to innovate in a traditionally non-innovative industry. More importantly, consumer demand for shipped goods only continues to increase.
Blockchain technology is becoming increasingly mainstream, so many established companies will continue to research and implement it. The difficult part is understanding how to properly utilize it in a way that helps businesses become more efficient. This is where IBM and Maersk succeed. This project already has the key technological foundations and partnerships in place to have a significant impact on the future of the global shipping industry. This project is still in its infancy. It will be interesting to see how it continues to evolve in the coming years.