In today’s globally dispersed complex supply chains, it is common for products to be manufactured at a location while the parts are sourced from different geographies and the final product being distributed for sale all over the globe. These supply chains have grown to be a trillion-dollar business and the software SAS solutions that help manage and optimize these business processes are more than $13 billion worth in revenue. The high risks and complexities involved in these business processes drive the dollar spend in this area.
For example, take a company that imports wine from France to America. The products leave the French warehouses in trucks to be delivered to the seaport. Then they are transferred to a ship that sails in the Atlantic for over 30 days. During this 30-day time frame, the importing company has no idea where the products are at and if they are on target to be delivered in time. Did the product get on the ship or is it held up at the dock for any reason? Is the paperwork in order? Where is it on the Atlantic Ocean? How long do the customs take? When exactly will it be delivered to the local warehouses? On top of that, the truck driver shortages can cause unexpected delays in delivery. The parties involved have to manage the uncertainties and work with the lack of visibility involved. The paperwork of global imports and exports is estimated to add an additional 20% overhead. It’s been estimated that these challenges in the shipping industry costs businesses upwards of 600 billion annually.
The ingenious blockchain technology has a huge potential for rapid innovations in such industries to bring value through increasing visibility and reducing costs. A blockchain is, in the simplest of terms, a time-stamped series of undisputable record of data that is managed by cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain).
Recently, Maersk, who has been the largest container, ship and supply vessel operator in the world since 1996, partnered up with technology giant IBM to develop a platform where all the parties of the shipping industry can join the consortium and build a network to keep the shipping operations transparent, traceable and dependable. They evaluated blockchain as a plausible technological solution. Blockchain simply refers to a bookkeeping method that chains together entries so that they are very difficult to modify later. It provides a way for large groups of unrelated companies to jointly keep a secure and reliable record of their transaction. Blockchain functions as an immutable database where all parties have access to every entry. Maersk and IBM are aiming to create global trade digitization (GTD) platform for the shipping industry which has the potential to provide organizations with a secure digital solution for exchanging digital documents and allow increased visibility into the supply chains.
The platform would be made available to every stakeholder in the shipping ecosystem including freight forwarders, ports, shippers, customs authorities and rival shipping lines. Instead of complex peer – to – peer messaging systems, Maersk envisioned a variety of different parties exchanging information through the GTD platform. Maersk would not act as an intermediary for the rest of the industry. Instead, the GTD platform would be neutral and function as a, single conduit of truth. The GTD platform can speed up document flow, improve predictive analytics, and real time tracking of location, and finally increase the trading safety and transparency. It is estimated that by using GTD platform the paperwork cost of shipping can be reduced by 15% which is a stunning 10 billion dollars of cost savings, annually.
Blockchain technology solutions in the shipping industry can help dramatically reduce the administrative costs while improving product traceability serving to create stronger supply chains and value creation for businesses as well as end customers. The blockchain technology seems to hold a strong potential for creating innovative solutions for complex industry challenges and more focus in this arena can open paths for innovations than can disrupt global markets.
To find more about Maersk And IBM Blockchain Shipping Solution, follow the link
https://newsroom.ibm.com/2018-08-09-Maersk-and-IBM-Introduce-TradeLens-Blockchain-Shipping-Solution
