CORE: IBM and Maersk turn to blockchain
Provided it is secure enough, it is possible to share everything via a data pipeline and thereby drastically reduce administrative burdens. The TradeLens blockchain platform, a partnership of IBM and container shipping giant Maersk under the CORE colours, appears to meet this demand. “The fear of key company information ending up in the wrong hands is a thing of the past now”, IBM’s TradeLens Authorities Leader Norbert Kouwenhoven says.
It is a given that logistics can be made much more efficient, despite all the efforts expended by governments and companies. Kouwenhoven provides a random example: “The freighter carrying the long-awaited latest generation of GPS devices finally enters Rotterdam. Everyone is already virtually jumping with joy on the quay. But alas, the container with the electronics has been left in Singapore for some reason. Or, while the goods have been brought along, the accompanying documents have not, so the shipment cannot be cleared. To tackle these and similar persistent problems, we have come up with a solution: TradeLens. We collect all events and milestones of a container, as well as all accompanying documents, such as the packing list and bill of lading. From the moment it is loaded, we follow it on its journey to the port, the terminal, the ship – right up to the other side of the ocean. At this stage, we’re focusing on ocean freight, but we plan to also support air freight and bulk shipping in time. We focus on landing points, such as the Netherlands, the US and Singapore – as these three constitute an important global axis. Countries like Belgium, Peru and Saudi Arabia, too, are in. We’re currently working on having a number of other South American countries accede and have started talks with China and Russia. In addition, a number of exporters and freight forwarders are on board.”
Strictly separated data flows
IBM, Maersk and Customs have been working on the data pipeline concept for ten years now, such in the context of various European research projects. Kouwenhoven: “While the desire to share information on shipments of goods has always existed, there was less in the way of readiness to invest, also out of the fear that company-sensitive data would be accessible to competitors. After having conducted multiple tests with blockchain technology, however, we’re now able to provide reliable security in the form of TradeLens, which, on the one hand, features strong encryption and, on the other, uses channels, allowing for strictly separating various data flows. This means that leaking becomes impossible, which in turn means that you do not need to be afraid of the competition gaining access to key information.
Of equal importance is the fact that documents, once loaded into the blockchain, can no longer be removed. While you can upload a new version, the previous version remains visible. In other words: if something starts out as fireworks in the chain, it’s impossible for someone to turn it into toys at a later stage. Moreover, multiple copies of the database exist, the so-called nodes. Should someone mess with one of those copies, this will create a mismatch with the other versions. These safeguards have won businesses over. The economic crisis, too, lent a hand. Businesses wished to tackle the inefficiency of the supply chain – preferably, things needed to be accomplished a lot more cheaply.
Another crucial aspect was the constructive attitude of Customs, including, for instance, of the American authorities. They stated to consider TradeLens data to be a source for de-risking containers. Suppose they would have said: ‘We’re not interested, but do whatever you like’. That would have prompted us to drop the project. Their endorsement allowed us to elaborate on our landing places strategy and develop a viable business case.”
IBM keeps the underlying blockchain technology from the view of the user as much as possible. Kouwenhoven: “The user experiences the platform as a messenger service. An exporter, for instance, will be provided with a web address to submit a container number to, which number is then saved in the blockchain. The data they receive in return, and the format it is returned in, depends on their authorisation level. Customs officials are able to retrieve data – that is, all data provided by the parties involved in TradeLens – on containers being shipped to the country using their own dashboard CRIS. These officials may in turn provide status information, such as ‘container selected for inspection’, or ‘container released’. Customs can compare the available data to its own reference data, such as the historical data with respect to a certain company, and could for instance check it against a list of offenders.”
To have all necessary data available in advance: this, according to Kouwenhoven, is what everyone wants. “This would allow Customs to deploy capacity more effectively, for instance. Suppose that, according to the declaration, a shipment is made up of toys, but the TradeLens data show that the shipment derives from a fireworks factory in China. This would call for an inspection. Things are different for a company that acts ethically and promises to always publish the bill of lading, purchase order, packing list and certificate of origin in TradeLens. In this case, too, supervision will still be necessary. But suppose that you will have a certified broker, such as an expeditor, inspect all these procedures, as well. And suppose that this broker acts as an additional safeguard for Customs, guaranteeing that the company is fully compliant. In such a case, you might question whether such companies still need to complete all those declaration forms, especially when you’re able to have access to all required information from TradeLens with but a single press of the button. Naturally, all this is in the end a matter for Customs to decide.”
“Look, if you want to smuggle goods, you’re clearly better off not using our system. But refusing to participate is telling in itself. To be able to participate, you must act ethically, as the data available in TradeLens are visible to Customs. By the way, IBM does not guarantee the veracity of these data. It is up to the customs authorities to verify this. The data are actively used by the companies in their supply chain. If the companies providing the data are reliable, odds are that their data are as well. In this fashion, TradeLens can be an effective quality sieve.”
Not drowning in a sea of data
In principle, the quantity of data companies may upload to TradeLens is unlimited. So how do you gain access to the most relevant information? For Customs does not wish to drown in a sea of data. Kouwenhoven: “Initially, we offered the service an interface, allowing employees to manually enter a container number and be provided with all related events. The number of containers arriving in Rotterdam is quite massive, however. It quickly became clear that we needed to automate matters and start using risk rules. By now, Customs is able to retrieve data via CRIS and combine them with the relevant TradeLens data. Applying a filter then allows for mapping the shipments featuring the highest risk.”
Tracking individual cucumbers
According to Kouwenhoven, only a few of the many available possibilities are used by TradeLens in its current form. “There is so much to do yet. We’re currently working on Profile, a successor to CORE, for instance. This project combines TradeLens data with other sources, such as the web. You can look at it as a form of counterintelligence to be used in support of CRIS. Suppose that Customs has to deal with a new company that claims to grow cucumbers in Peru. In such a case, you want to see how they advertise themselves online. Do all pages refer to cucumbers, or do parts of their website deal with bombs and grenades?”
“In addition, we wish to cover the logistics at the head and tail ends of the chain,” Kouwenhoven continues. “As mentioned earlier, we’re currently checking the journey from empty to emptied container. Everything that happens before and after is currently invisible to us. A separate ‘before and after application’, to be developed by third-party providers, will enable you to track individual boxes. For each individual cucumber in the supermarket, this will allow you to know exactly which box and container it was shipped in and where it was grown. Having such insight is beneficial not only to businesses, but also to consumers. For it enables them to verify the pasture the cow whose meat they’re eating has been grazing on. And whether their pair of jeans actually deserve to have a fairtrade certification mark: they can check whether any child labour was involved.”
Other interesting applications include subjecting the TradeLens data to analysis tools. “Companies want to know the variation between estimated and actual shipment arrival dates, for instance,” Kouwenhoven says. “You can render advice on the preferential route for a container leaving Singapore for South Africa on the basis of the weather report and the ocean currents. Or consider a pharmaceutical multinational that wishes to use its reefer’s log to demonstrate that its shipment of pills never exceeded the maximum and minimum temperatures permitted. In short, there’s a lot coming up yet!”
Even though Maersk started the initiative and forms the so-called launching user of TradeLens, it is treated like every other user within the organisation structure opted for. Kouwenhoven: “TradeLens is explicitly not a Maersk platform, but an industry-wide one. In term, similar variants may come to be developed, as other parties, too, must connect to CRIS. In time, this will no doubt lead to harmonisation – which is something we press for ourselves. It is our hope that the World Customs Organisation will emphasise the importance of TradeLens, for instance.”