Maersk and IBM are to work together to create a solution to modernize the shipping and logistics industry using blockchain technology.

According to the two companies, the new solution will help manage and track the paper trail of tens of millions of shipping containers around the world by digitizing the supply chain from end to end. It will enhance transparency and security, and has the potential to save the industry billions of dollars.

“As a global integrator of container logistics with the ambition to digitize global trade, we are excited about this cooperation and its potential to bring substantial efficiency and productivity gains to global supply chains, while decreasing fraud and increasing security,” said Ibrahim Gokcen, chief digital officer of Maersk. “The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.”

Blockchain technology consists of a secure and transparent shared network which provides each participant detailed end-to-end visibility of a container’s progress and status, including the real-time exchange of original supply chain events and documents. A record cannot be modified, deleted or appended without the consensus of others on the network.

The solution, which is scheduled to go into production later this year, is based on the open-source Hyperledger Fabric from the Linux Foundation. It is designed to reduce fraud and errors, reduce transit and shipping time, improve inventory management and reduce waste and cost.

Maersk and IBM carried out a pilot with the Customs Administration of the Netherlands, the US Department of Homeland Security Science and Technology Directorate, and US Customs and Border Protection to show the potential value of a trade digitization solution by shipping goods from Schneider Electric on a Maersk Line vessel from the Port of Rotterdam to the Port of Newark. Shipments of flowers from Kenya, Mandarin oranges from California and pineapples from Colombia were also used to validate the solution for imports coming into Rotterdam.

“We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done,” said Bridget van Kralingen, senior vice president of industry platforms at IBM. “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 potentially provide massive savings when used broadly across the ocean shipping industry ecosystem. Bringing together our collective expertise, we created a new model the industry will be able to use to help improve the transparency and efficiency of delivering goods around the globe.”