Blockchain Technology Can Cut Costs by $27 Billion Annually

The era of containers equipped with Internet of Things (IoT) sensors that automatically check the related data is arriving.

Denmark-based Maersk Line, a shipping giant in the global market, joined hands with IBM in March to apply the blockchain technology to its logistics systems. The company plans to make all the routes of 10 million containers traceable.

Maersk will make its new bloackchain platform work this way. When a shipper sends a ship order to Maersk, the process will be shared with product manufacturers, shipping companies, ports, warehouses and customs offices. All the data regarding to the product moving path will also be sent in real time. In short, all the interested parties that participate in the transactions will be easily aware of the process. Security has been strengthened as well. Unlike the past when all the transaction information were stored in large computers or servers, hackers need to break in all the computers connected with the network to launch a cyber-attack.

The new system can also cut costs as the risk of forgery and alteration of customs documents and receipts, which are required for the shipping process, is reduced. IBM estimates that the global container shipping and logistics market as a whole can save US$27 billion (29.21 trillion won) of costs a year by introducing the blockchain technology.

Maersk seeks to reduce costs by using unfamiliar blockchain technology because its current surviving strategy reached the limit. Global shipping companies have tried to slash costs through the economy of scale in order to survive in the growing competition in the shipping industry. They are enlarging a ship and shipping goods as many as possible to save costs. However, some shipping companies have shown a loss due to an oversupply of ships as they have beefed up in size one after another. In short, they need a new surviving strategy now.

Domestic shipping companies, which are recently suffering from the market depression, also seeks to introduce the blockchain technology. Hyundai Merchant Marine started researching on the blockchain technology and successfully completed the sea trial for refrigerating containers from Busan to China’s Chengdu in September. SM Line, a container carrier based in another country, is also focusing on developing the blockchain platform by forming a consortium with Samsung SDS.