Maersk and IBM roll out blockchain-based joint venture with a global trade focus

With a focus on providing more efficient and secure methods for conducting global trade through the usage of blockchain technology, ocean cargo giant A.P. Moller-Maersk and technology powerhouse IBM announced plans this week for a joint venture (JV).

IBM and Maersk said that the objective of this JV is to provide a jointly developed global trade digitization platform that is built on open standards and designed for use by the entire global shipping ecosystem, adding that it will address the need to provide more transparency and simplicity in the movement of goods across borders and trading zones.

And they added that blockchain’s key components are a great fit for large networks of disparate partners, as blockchain is a distributed ledger technology that 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.  As for its application to digitize global trade processes, they said that a new form of consent can be introduced into information flow, which empowers multiple trading partners to collaborate and establish a single shared view of a transaction without compromising details, privacy or confidentiality.

The blockchain relationship between Maersk and IBM dates back to June 2016, when they initially teamed up to build new blockchain- and cloud-based technologies, which have subsequently been piloted by various concerns, including DuPont, Dow Chemical, and U.S. Customs and Border Protection, among others. This new JV, or company, will be led by CEO Michael J. White, former president of Maersk Line in North America, and Vincent Clerc, Maersk chief commercial officer, will serve as future chairman of the board.

A Maersk spokesperson told LM there were various drivers for this JV with IBM, citing data from the World Economic Forum estimating that reducing barriers will increase global trade by 9.4 to 14.5 percent.  

“Maersk sees a massive opportunity in this, for the benefit of all actors of the global shipping ecosystem,” the spokesperson said. “This new company, subject to regulatory approval, can provide a space for the industry to jointly reduce inefficiencies and build revenues based on that value add. IBM and Maersk have partnered over the years on various technologies to improve the way goods travel through the global supply chain. The implementation of a variety of technologies helped Maersk improve and build new capabilities that improved its operations over the years. Today blockchain opens up an entirely new set of possibilities and a unique opportunity to engage the entire global shipping ecosystem. It provides a single shared view of the state of global trade transactions and uses smart contracts to ensure authorizations are in place to improve efficiency.”

As for how the companies will collaborate, they explained that they will use blockchain technology to power the new platform and also leverage other cloud-based open source technologies like artificial intelligence, IoT and analytics, delivered via IBM Services, in order to help companies move and track goods digitally across international borders.  

When asked how this JV will benefit supply chain and logistics stakeholders, the Maersk spokesperson said that as development work progresses, the scope of the platform will be expanded to include a wide range of digital services and solutions, supporting efficient and safe trade for all players, including:

• Manufacturers, retailers, and other traders would benefit from a streamlined and improved supply chain allowing for greater predictability, early notification of issues, and improved inventory management;
• Shipping lines would benefit from increased visibility to improve the cost and reliability of operations, as well as pre-built connections to customers and partners;
• Logistics providers such as freight forwarders would be able to offer their customers improved, lower cost services given real-time access to the end–to-end supply chain information and digital tools for customs brokerage services;
• Customs authorities would get a better view of the flow of goods coming their way, enabling better allocation of resources and improved targeting accuracy for inspections;
• Ports and terminals would benefit from more efficient operations driven by increased transparency, improved document flows and higher cargo throughput rates; and
• Banks providing digital trade finance products would get increased visibility into key events impacting their financing as well as the digital documentation supporting the transactions

“Today blockchain opens up an entirely new set of possibilities and a unique opportunity to engage the entire global shipping ecosystem,” the spokesperson said. “It provides a single shared view of the state of global trade transactions and uses smart contracts to ensure authorizations are in place to improve efficiency.”

Looking ahead, Maersk said that setting up the joint venture is subject to regulatory clearance with various competition authorities worldwide, adding that upon regulatory clearance, solutions from the joint venture are expected to become available before the end of the year.

“The major advances IBM has made in blockchain have shown that the technology can foster new business models and play an important role in how the world works by building smarter businesses,” said Bridget van Kralingen, senior vice president, IBM Global Industries, Solutions and Blockchain, in a statement. “Our joint venture with Maersk means we can now speed adoption of this exciting technology with the millions of organizations who play vital roles in one of the most complex and important networks in the world, the global supply chain. We believe blockchain will now emerge in this market as the leading way companies seize new untapped economic opportunities.”

Read: Maersk IBM Form Joint Venture Applying Blockchain to Improve Global Trade & Digitize Supply Chain