The two companies announced Tuesday they are joining forces to create an open standards platform for global trade activity that, upon regulatory clearance, will be available in six months. The architecture and cost around global trading is growing every year. More than $4 trillion in goods are shipped globally annually, and more than 80 per cent of goods consumers use daily are carried by the ocean shipping industry, according IBM. The administration side of the entire shipping process is estimated to reach one-fifth of the actual physical transportation costs.
A report from the World Economic Forum says reducing barriers within the international supply chain could increase global trade by nearly 15 per cent. Bridget van Kranligen, Senior vice president of industry platforms for IBM echoed those statements in a recent blog post, and said blockchain is perfectly suited to address these challenges.
“A distributed ledger that establishes a shared, immutable record of all transactions within a network of permissioned parties, blockchain is not only powering new digital currencies, it is also ideally suited to aid large ecosystems,” she wrote.
Through a blockchain-powered system, ports and terminals could improve coordination across their networks and gain real-time access to information, while shippers will benefit from less safety stock inventory and improved transparency to validate fees and surcharges. Multiple companies have already expressed interest in the platform while testing it through pilot projects since 2016, including DePont, the Customs Administration of the Netherlands and the U.S. Customs and Border Protection. General Motors and Procter and Gamble have also explored it, according to a press release.