Supply Chain Matters highlights a side panel reinforcement to our just published 2018 Predictions Deep Dive- A Shifting of Priorities for Digital Transformation and Supply Chain Tech Investments. We highlight a significant joint announcement made this week regarding the potential broader application of Blockchain technology in global shipping processes.
After a joint collaboration that began in June 2016, ocean container industry global shipping leader A.P. Moeller Maersk and Cloud platform technology provider IBM, announced their intent to form a joint-venture company to provide more efficient and secure methods to manage global trade leveraging blockchain technology.
According to the announcement, the purpose of the new company will be to offer a jointly developed digitized global trade platform built on open standards for use by the broader global shipping ecosystem.
Since the original collaboration among these two providers, the announcement notes that multiple parties have piloted use of the Blockchain platform and cites names such as Dupont, Dow Chemical, Tetra Park, Port Houston, Rotterdam Port Company and U.S. Customs and Border Protection.
With the new company charged with scaling the platform, other companies noted as expressing interest include General Motors along with Procter & Gamble to streamline the global supply chains that they operate.
The new company has plans to commercialize two core capabilities:
- A shipping information pipeline that can provide end-to-end supply chain visibility.
- A paperless trade process to digitize and automate shipping paperwork filings to include Blockchain-based smart contracts to help speed approvals.
The announcement indicates that the platform is to be built on IBM Blockchain technology provided through the IBM Cloud and powered by Hyperledger Fabric 1.0, a blockchain framework hosted by the Linux Foundation.
Maersk and IBM further indicated intent to establish an advisory board of industry experts to help shape the platform, services need, guidance and feedback on industry factors and use of open standards. Supply Chain Matters especially applauds such a move, since this be essential to insure broader adoption.
This new company is to be located in the metropolitan New York area and will be led by Michael J. White, former president of Maersk Line North America. The announcement states that upon regulatory clearance, initial applications are expected to become available within six months.
Key Reader Takeaways Relative to This Announcement
- There is no doubt that this is a significant development- the industry leader in ocean container shipping, with a declared goal to further integrate into supplemental logistics and inter-modal services, partnering with Big Blue. It is sure to motivate other shipping and logistics and blockchain industry actions in the months to come, hence the importance of stressing open standards and an industry advisory board. We believe that regulatory clearance will not be a slam dunk in that concerns for dominant market influence will need to be adequately addressed.
- Overall cost-to-deploy will be another important factor to monitor over time. Beyond the obvious savings in current administrative and transactional costs, an important consideration is always the amortization of costs vs. benefits of the end-to-end platform among all of the various supply chain network participants.
- What is initially encouraging is the initial participation of various government customs and port agencies in developing a blockchain powered regulatory framework, but organized labor resistance will have to be addressed over time.
- As the Wall Street Journal opined in its coverage of this announcement, both Maersk and IBM have been attempting to reinvent themselves, and thus the stakes are high for both of these companies to make this joint venture successful.
Technology focused enterprises strive for industry first-mover advantage. When an influential shipping line player in an industry that has traditionally been a technology laggard, makes this week’s joint announcement to foster blockchain technology, it is a significant indicator of building interest levels.
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