IBM and Maersk announced a joint pilot based on use of blockchain technology to facilitate cross-border supply chain. Blockchain is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”, The Truth About Blockchain, Harvard Business Review, Iansiti, Marco; Lakhani, Karim R. (January 2017). No one party can modify, delete or even append any record without the consensus from others on the blockchain network. What makes this announcement interesting is the fact that this is probably the second largest case of blockchain use in economy of scale (shipping industry in this particular case) after digital currency.
The blockchain-based new global trade digitization solution encompasses a network of shippers, freight forwarders, ocean carriers, ports and customs authorities. Blockchain technology reduces the cost, waste and complexity of trading, fraud and errors, the time products spend in the transit and shipping process, and improve inventory management. The costs associated with trade documentation processing and administration are estimated to be up to one-fifth the actual physical transportation costs. Enhanced transaction security, transparency and built-in regulation enforcement are the least factors contributing to adoption of new technology. It’s not by chance that the U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection are also participating in this pilot.