Shipping giant A.P. Moller-Maersk (AMKBY) is the latest company jump onto the blockchain train.
Maersk, which owns the world's biggest container operator, said Tuesday that it will enter a joint venture with International Business Machines Corp. (IBM) to create a more efficient and secure platform for organizing global trade using blockchain technology.
The companies, which began collaborating on the new technology in 2016, said the new company's platform could be used to streamline operations for the entire global shipping ecosystem. Large companies such as DowDuPont Inc. (DWDP) already have piloted the platform.
The idea came from the current stack of paperwork needed to process and track the shipping of goods. Maersk said the maximum cost of the required trade documentation to process and administer many of the goods shipped each year is estimated to reach one-fifth of the actual physical transportation costs.
The companies said blockchain, the technology behind increasingly popular cryptocurrencies such as bitcoin, is ideal for organizing large networks with different partners like the shipping industry, which transports more that $4 trillion goods a year.
"The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit," said Vincent Clerc, chief commercial officer at Maersk and future chairman of the board of the new joint venture.
More corporations, including General Motors Co. (GM) and Procter & Gamble Co. (PG), have expressed interest in the platform and are exploring ways to use it to streamline supply chains and customs clearance. Singaporean and Peruvian customs also are exploring collaborating with the platform to facilitate trade flows and enhance supply chain security.
The move comes as Maersk and IBM have been attempting to reinvent themselves. IBM, the 106-year-old technology giant, has been looking to new lines of business including blockchain as sales in its legacy business of selling hardware and software slow. Maersk has been trying to transform itself to into a global supply-chain major like United Parcel Service Inc. (UPS) and FedEx Corp. (FDX) by integrating its transport and logistics units and spinning off its oil business.
The new company will be headquartered in the New York metropolitan area and led by former president of Maersk Line in North America Michael White.
Solutions from the joint venture are expected to become available within six months of regulatory clearance.
IBM shares, which have fallen 2.5% over the past 12 months, rose 1.45% to $165.50 during premarket trading,
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(END) Dow Jones Newswires
January 16, 2018 08:51 ET (13:51 GMT)