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IBM-Maersk blockchain alliance cuts oceanic shipping times by 40%

The TradeLens shipping partnership now has 94 partners, despite blockchain skeptics.

A colossal amount of cargo goes through the world's ports, like Barcelona's here in Spain, sent by standard-sized containers loaded on and off ships, trucks and trains. IBM and allies say their TradeLens blockchain-based network streamlines the paperwork.

A colossal amount of cargo goes through the world's ports, like Barcelona's here in Spain. IBM and allies say their TradeLens blockchain-based network streamlines the paperwork.

Stephen Shankland/CNET

Did you just get a TV from Tokyo or flowers from France? Blockchain, that potentially disruptive but much-derided technology, might have helped deliver the goods.

A blockchain-based IBM partnership with global shipping colossus Maersk has now expanded to include 94 partners, Big Blue said Thursday. That includes shippers, customs houses, ports and others that have to wrangle paperwork as containers full of goods move around the world.

The result is shipping times that dropped a whopping 40 percent on average, according to Marie Wieck, who leads IBM's 1,600-employee blockchain work.

That's the kind of improvement that every inventory manager and bean-counter in accounting loves. And it ultimately means lower prices for anyone buying that TV or those flowers.

Six decades ago, the standard-size shipping container famously revolutionized shipping. Blockchain could do the same. 

"We believe it has the potential to have the same amount of impact on the process," Wieck said.

Wait, what's blockchain again?

Blockchain cuts paperwork-handling hassles by a factor of 10 by making it easier for everyone involved to get bills of lading, sanitary certificates, customs releases, invoices and other necessary documents, Wieck said. Before blockchain's swifter processing, a "container spent more time in the ports than in the ocean" when shipping flowers from Mombasa, Kenya, to Rotterdam in the Netherlands, she said.

Blockchain lets cooperating companies or people share data -- sales transactions or property records, for example -- on a shared network of computers. The information is distributed across all of them instead of isolated on just one, an idea called a shared ledger, with encryption technology writing the data to all the systems in an ever-lengthening series of interlinked blocks.

Blockchain bakes trust into transactions because a single database eliminates some he-said, she-said disagreements that ordinarily crop up when multiple parties are trying to reconcile two separate databases. Encryption technology ensures that transactions really are between the parties involved.

The blockchain idea grew out of bitcoin and stores transaction data for all other cryptocurrencies, too. But much of the enthusiasm for blockchain is from its use in other domains, everything from voting and lotteries to ID cards and graphics rendering.

Blockchain skeptics

Still, blockchain has plenty of detractors who think of it as a solution in search of a problem.

Vint Cerf, one of the creators of the internet, tweeted a photo of a flowchart for tackling the issue. The top box in the flowchart states: "Do I need a blockchain?" A single arrow points to another box: "No."

The chief executive of Western Union, a partner in a high-profile blockchain money-transfer project from startup Ripple, said in June that so far, "it's still too expensive."

But TradeLens shows there's enthusiasm, too. Among its 94 partners are shippers Pacific International Lines and Hamburg Süd; customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia and Peru; and port operators in Philadelphia, Hong Kong, Rotterdam, Halifax, Nova Scotia, and Bilbao, Spain.

IBM rival SAP, a business software maker and another blockchain fan, said that the reality of blockchain is that it's not a get-rich-quick scheme.

Blockchain is a business network, said Gil Perez, SAP's senior vice president of products and innovations. "It is critical for multiple companies to come together and agree on a business process, which is lengthening the adoption of blockchain in the enterprise," he said.

SAP has a blockchain project for shipping, logistics and customs, too, and it's working with partners including the US Customs and Border Protection agency and shipping company UPS.

Logging a million events per day

That work is in the proof-of-concept stage. IBM's TradeLens service is part of IBM's early adopter program, but it's up and running in the real world. It captures more than a million shipping events each day, 154 million in total so far. 

"We don't see scalability as a factor at all," Wieck said.

TradeLens for now has been a closed partnership, but that's changing. "We're anticipating opening up general availability for anybody who wants to join later this year," Wieck said. Cryptocurrencies use public blockchains, which means anyone can operate a node on the network and contribute transactions, but TradeLens uses a more restrictive "permissioned" approach with some controls on participation. It maintains the core blockchain idea of distributing data across multiple servers, though.

Also Thursday, IBM opened a programming interface that will let other companies' computer systems interact with the blockchain. IBM charges for access to the TradeLens, offering it online as software as a service and sharing revenue with founding partners.

IBM has found it's needed to make course corrections with TradeLens -- for example, in the types of documents stored on the blockchain and the "onboarding" process to enlist new partners. But when done right, the blockchain greases the wheels of commerce.

"When there is real transparency to all data on the chain, you have less disputes because everybody has seamless visibility," Wieck said. "We feel very comfortable about the model having value for the different types of participants."  

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