The blockchain is heading out to sea.
IBM Corp. and shipping operator A.P. Moller–Maersk Group said they’re teaming up to track shipping transactions using the technology that powers bitcoin. The tracking system is being built on top of the Linux Foundation’s Hyperledger platform and will link shippers, freight forwarders, ocean carriers, ports and customs authorities.
The goal is to track 10 million shipping containers by the end of this year, some 14 percent of the 70 million containers shipped globally each year. IBM estimates that the digitization of the supply chain process from end to end could save shipping carriers a whopping $38b billion a year.
According to The International Business Times, IBM has used the case of the shipment of avocados from Mombasa to Rotterdam as an example of how costs can be cut. It calculated that the movement of the shipping container itself was about $2,000. The cost of the physical paperwork associated with it came to $300, meaning that by cutting paperwork, the cost can be driven down by around 15 to 20 percent.
The paperwork involved with international shipping is also said to slow down travel times, with documentation and customs clearance estimated to add anywhere from 17 to 33 days to total shipping time. Although customs clearances would still be required, digital paperwork, in theory, would cut down the processing time at every point the container transits.
There are some challenges facing the rollout. In particular, it has yet to be clarified who will be running nodes on the network and how participants will engage with the system. But it is expected that all major participants will eventually be able to run their own nodes.
“Working closely with Maersk for years, we’ve long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to provide massive savings when used broadly across the ocean shipping industry ecosystem,” IBM Senior Vice President of Industry platforms Bridget van Kralingen told Reuters.
A rollout of the platform is expected later this year.