Maersk announced that it has completed the first live trial project of blockchain. The project is meant to simplify how goods worth trillions of dollars are shipped around the globe. Currently, slightly more than 15% of the shipping fleet traffic around the world is handled by the Danish shipping company. The blockchain application has been developed in conjunction with International Business Machines Corp. (NYSE:IBM) and has been motivated by the extreme inefficiencies that exist in shipping.
“Global trade $20 trillion, big chunk of global GDP, and container shipping is a huge part of it. Fifty percent travels on containers. The entire process is extremely inefficient,” said Blockchain research VP at IBM, Ramesh Gopinath.
Smart contracts
In the wake of a sharp decline in annual revenues, Maersk is hoping to use blockchain in cutting costs by eliminating paperwork the companies and its clients have to handle and instead make use of a smart contract system that is based on blockchain technology. A Maersk study conducted in 2014 revealed that in the process of shipping goods through a container, around 30 people are involved as well as numerous organisations. Separate interactions totaling more than 200 are thus required with new documents being required each step of the way.
Using the Fabric blockchain which is an open source product from Hyperledger, the trial involved shipping Schneider Electric’s goods across the Atlantic. This took place in the middle of February when the goods were shipped from Rotterdam to New Jersey’s Newark Port. The trial revealed the massive potential of blockchain in the management of the supply chain.
Curb fraud and wastage
The use of blockchain technology in shipping is also expected to help fight fraud since it will make the inaccurate labeling of goods harder. And besides cutting costs by reducing paperwork, Blockchain technology is also expected to help make transactions faster. Additionally, there is the possibility of a more optimal use of available resources and the curbing of wastage as information on empty containers will be more easily available to more parties.
On Friday shares of International Business Machines Corp fell by 0.27% to close the day at $180.05.
