Blockchain technology received enormous publicity following the success of Bitcoin in 2017. Whilst logistics as an industry has traditionally been slow to adapt to new technology, the excitement surrounding such innovations has not gone unnoticed in boardrooms. Many realise that if they don’t try to adapt, they may get left behind.
Maersk has been the latest to throw its weight behind Blockchain. Together with IBM, it has announced intentions to form a joint venture that they hope will provide more efficient and secure methods for conducting global trade using blockchain technology.
The aim of the new company will be to offer a jointly developed global trade digitization platform built on open standards and ambitiously designed for use by the entire global shipping ecosystem. The companies state it will address the need to provide more transparency and simplicity in the movement of goods across borders and trading zones.
IBM and Maersk began their partnership in June 2016 to build new blockchain and cloud-based technologies. Since then, parties that have piloted the platform include DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands and U.S. Customs and Border Protection. They have also garnered interested from General Motors, Procter &Gamble and Agility.
Clearly Maersk and IBM’s previous dealings have given them the confidence to launch such a platform. However, a project on this scale is completely different to piloting. The success of the platform will depend on whether Maersk and IBM can convince the entire supply chain ecosystem, including shippers, freight forwarders, ocean carriers, ports and customs authorities, to sign up. If they do not, the entire project will fall down.
There are also a number of drawbacks currently holding blockchain technology back. The transparency provided is not always welcome. Not to be overly cynical, but there are some things that companies wish to remain secret.
Fraud is another issue that blockchain hopes to solve, but there are undoubtedly still problems. In a blockchain involving an entire supply chain, only one transaction may need to be authenticated inaccurately to facilitate illegal cross-border trade. This would require over half of the network to authenticate the transaction, but it is still a risk.
One thing that blockchain can hope to solve in the more immediate term is the hassle of paper documentation. Maersk estimates that the cost of required trade documentation to process goods shipped by sea is roughly one-fifth of the actual physical transportation costs. The automated system should in theory alleviate a sizeable proportion of these costs.
Last year, Maersk’s older software was hit by a serious cyber-attack, which is estimated to have cost the business around €300m. Albeit backed by IBM, it is quite a turnaround to now see Maersk at the forefront of innovation in the industry. The key issue facing the pair is that the underlying technology is still in its infancy. There are a variety of problems that need to be solved before entire supply chains are to welcome it with open arms.
For more insight on the technologies disrupting the supply chain, please click here to see Ti’s Trends in Logistics Technology report.
Source: Transport Intelligence, January 17, 2018
Author: Andy Ralls
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