Blockchain just revolutionized the¬†way we’ve been conducting¬†trade¬†for hundreds of years.¬†IBM, one of the world’s biggest technology companies, recently teamed up with¬†shipping giant Maersk to research blockchain technology. And together, they’ve created a game-changing blockchain platform for international trade.

By cutting out middlemen, creating smart contracts and offering an accessible, open platform, blockchain just made world trade faster, safer and a whole lot cheaper. Now, over 90 companies are participating in IBM and Maersk’s blockchain initiative, which they’ve named TradeLens. The trillion dollar industry that is international shipping just took a giant leap forward.

Trade is Complex, Corrupt and Costly

Even after the advent of the internet, modern trade is expensive and riddled with¬†complexity. For starters,¬†96 percent of international trade falls under at least one regulation according to the World Economic Forum. For instance, you need to submit a long list of documents to legally import anything to the U.S. This includes proof of insurance, an import license, an invoice and a description of what exactly¬†you’re shipping.

Filing and processing all this paperwork requires an intense amount of effort and resources. It’s even more challenging for developing nations that don’t necessarily have the funds or know-how to navigate developed countries’ purposefully complex and vague regulations.

Additionally, though most record-keeping is digital, not everyone has access to the same information. This leaves room for fraud and error and contributes to distrust between partners. All this slows down the economy and dissuades companies from conducting trade.

Michael White, CEO of Maersk TradeLens Inc,¬†explained in an email, “The cost of the required trade documentation to process and administer many of these goods is estimated to reach up to one-fifth of the actual physical transportation costs.”

The world ships approximately $16 trillion in goods annually, and approximately 80 percent travels on ocean-going vessels like Maersk’s. Getting rid of impediments to trade could boost world commerce by 15%, according to TradeLens.

How Blockchain Will Revolutionize Trade

IBM Teams Up With Shipping Giant Maersk For Blockchain Initiative

What is blockchain? It’s an open, unalterable and decentralized ledger of transactions, has the ability to disrupt virtually every industry. The way we ship things is no exception.

Virtually all levels of the global¬†supply chain can benefit from blockchain. Manufacturers, shipping companies, and retailers can all access to the same data at the same time. Since no one can edit or delete information once it’s in the ledger, there’s less room for fraud. This can also give governments an accurate understanding¬†of a shipping container’s contents.

Furthermore, shipping insurance companies can save money through blockchain’s smart contracts, meaning agreements with preset terms and guaranteed adherence, and¬†access to reliable information. This also encourages insurance companies to cover more shipments, which, in turn, fosters trade.

Additionally, everyone involved in shipping, especially carriers, can spend less time entering and reentering information.

In one study, Maersk and IBM demonstrated that using blockchain for trade can decrease a shipment’s transit time by 40 percent. And for a single shipment, blockchain can reduce the cost by thousands of dollars.

Just like bitcoin, which gives you the ability to make transactions without a bank, blockchain technology allows you to ship and track goods with fewer middlemen. This means that everyone except the black market¬†can benefit from blockchain’s unparalleled ability to accurately and safely store data.

IBM and Maersk’s Blockchain Initiative

Back in January, IBM announced that it was partnering with Maersk to create TradeLens, a blockchain platform for international trade. They built¬†TradeLens using IBM’s blockchain platform, which is founded on Hyperledger Fabric, Linux’s opensource blockchain community. IBM and Maersk tested the blockchain initiative for twelve months prior to its release, during which time they received feedback from industry members.

Today, TradeLens has already facilitated 158 million shipping events, and approximately a million more take place every day. A shipping event can mean processing an invoice, customs release, bill or any other supply chain transaction.

Furthermore, Maersk is no longer the only company using this blockchain platform for international trade. “Today over 90 global organizations participate in the platform, including shippers, carriers, freight forwarders, customs authorities and ports operators, showing its enormous potential to transform the shipping industry,” wrote White. These include national customs authorities like the¬†Netherlands, Saudi Arabia, and Singapore.

The Canadian border and the Port of Montreal have recently adopted it.

Blockchain Just Made Trade A Lot Easier

IBM and Maersk’s blockchain initiative is already saving cost and labor‚ÄĒand its only in its infancy. The platform is also another example of how blockchain is revolutionizing the modern economy. Though it’s hard to understand the scope of how blockchain will change international shipping, it looks like a trade just quietly underwent its biggest evolution in a very long time. Aside from IBM’s new blockchain based payment system, that is.