The cost and size of the world’s trading ecosystems continue to grow exponentially. More than $4 trillion in goods, including 80 percent of consumer goods, are carried by the ocean shipping industry. Just about every item in your home today arrived there via a vast network that transports everything from food and medicine to apparel and electronics from around the world.
Total trade represents 60% of the world’s GDP, and yet global supply chains are clogged with inefficiencies and heavily reliant on complex paper-based systems.
A single shipment of goods from East Africa to Europe can require over 200 unique interactions with 30 individuals and organizations, generating a four-inch stack of paper records. In some instances, it can cost as much in paper and administrative flow as it does to pay for the shipping itself.
If we can remove those types of inefficiencies, businesses would run smarter, commerce would move faster, and experts believe global trade volumes could increase by 15 percent. That’s great for business, for consumers, and for the economies of the world.
We believe the most promising technology to remove many of those barriers is blockchain. A distributed ledger that establishes a shared, immutable record of all transactions within a network of permissioned parties, blockchain is not only powering new digital currencies, it is also ideally suited to aid large ecosystems.
That is why today we’re excited to announce a joint venture with Maersk, a global leader in container logistics, that will bring this exciting technology to all the participants who play a vital role in one of the world’s biggest networks – the global shipping ecosystem.
Over 18 months, through initial pilots, we’ve shown that blockchain can work on many of the most common barriers in supply chains. We’ve used the technology to securely digitize, automate, and store critical paperwork. Early testing demonstrated that we can significantly reduce administrative costs, which at the time of testing could be as high as 15% of the value of the goods shipped.
Now, through this new company, IBM and Maersk will commercialize and scale blockchain solutions to a much broader group of global corporations, many of whom have already expressed interest in these solutions: General Motors, Procter and Gamble, Agility Logistics, Singapore Customs, Peruvian Customs, APM Terminals, PSA International, and Guangdong Inspection and Quarantine Bureau for trade corridors in and out of China.
Our aim is to create a blockchain platform that will benefit participants throughout shipping supply chains, including manufacturers, shipping lines, freight forwarders, port and terminal operators, shippers, and customs authorities. To do this, our joint venture — an entity conceived and supported by, but separate from, both IBM and Maersk — will promote an open industry platform using IBM Blockchain technology that will benefit all the players in the ecosystem.
As our world becomes more connected and networks grow in size and complexity, we believe many more industries will embrace blockchain technology. Businesses are already realizing the value of secure methods of transferring assets, permanent and permissioned records, and the establishment of trust within a network. In taking on the challenges of the global trade ecosystem – addressing supply chain issues from port to port, around the world – our work with Maersk is a significant step in further advancing broad adoption of blockchain.
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