IBM and Danish shipping company Maersk announced that they will be involved in a joint venture to create a new blockchain company focusing on global trade. The two companies have been working together for some time.
The relationship began in 2016, with both companies creating a partnership to digitize supply chain using blockchain technology.
The new company will be based in New York owned exclusively by both companies. Maersk will own the majority at 51 percent, and IBM will own 49 percent. It will focus on international shipping. It aims to help those involved with global supply chains track shipments and replace paperwork.
IBM and Maersk first test with the blockchain was during their initial partnership in 2016. Both traced a container of flowers from Mombasa, Kenya, to Rotterdam, The Netherlands. After several tests, both saw the capabilities of the technology.
Several companies joined the two in testing the value of the blockchain. Dupont, Dow Chemical, and U.S. Customs and Border Protection joined IBM and Maersk through tests.
Both companies hope to commercialize this blockchain venture. Former president of Maersk Line in North America Michael J. White will be the chief executive of the new company. The new company will be based around Paperless Trade, a product used for digitizing and automating paperwork filings between companies.
Cost Of Shipping
Efficiency is needed across international shipping networks. Supply chains are being slowed down by the paperwork needed to verify the large quantity of goods that are sent between nations.
A study from 2013 found that reducing the time that it takes to share information at the borders "could increase GDP by nearly 5 percent and trade by 15 percent."
Freight and logistics in the United States cost nearly $1.5 trillion annually. Last month, UPS announced that they would be joining the Blockchain in Transport Alliance. BITA is a forum for the development of blockchain technology standards and education for the freight industry.
Blockchain technology would allow information to be stored in decentralized ledgers that are more difficult to be forged or tampered with than regular paperwork used in trade. This technology would also allow for more transparency in the supply chain.
Using blockchain technology is not just for keeping records of financial transactions. Blockchain could be used to track shipments as they make their way across the world. Uploading paperwork to the blockchain would allow all those involved to view changes to the document.