Big boy super-games
Looking at announcements of a few recent partnerships around distributed ledger and supply chain, we wonder if indeed the overlap of AI and Blockchain is truly going to shape our world? By “world”, yes, we mean do our day to day lives, after all when you hear investments on part of companies like Mitsui and Maersk, you realize this stuff affects everything we do, these are logistics behemoths we are talking about here, what they do, affect our fried eggs in the morning till the supplies for brushing teeth at night. Seriously, these guys regularly send containers to parts of the world we only dream about, like deep in the Amazonian rainforests or monasteries in upper Tibet and they literally have the power to topple a small country, these are the supply lines for the modern world, operating at a mind numbing scale. So, when Japanese shipping giant Mitsui OSK partnered with IBM to undertake a blockchain proof-of-concept to streamline international trade flows, we sat up , but were hardly surprised. And consequently, there were no prizes for guessing that the Watson group inside IBM became heavily involved in powering the intelligence behind this mammoth track and trace solution. The initial “demonstration tests” saw some real-time trade transactions happening using a blockchain-based smart application. Though the details of the project are sketchy, the idea is to digitize, store and share among participants, trade agreements, logistics and insurance documents, and more… How efficiently, reliably, timely, that knowledge graph can disseminate, will dictate the number of benefits such an implementation enjoys over traditional trade systems. This proof-of-concept, utilized the Hyperledger Fabric blockchain framework, developed by the Linux Foundation-led Hyperledger blockchain consortium. The successfully tested a prototype using distributed ledger technology (DLT) to streamline international transaction agreements, used DLT start-up consortium R3’s Corda software to streamline Master Agreement negotiations.
We are eagerly waiting to know more, just as we are also watching with interest, further news that comes available about the deal between Maersk lines, Microsoft and EnY accounting that took place last September. Apparently their aim is to apply blockchain technology in the field of marine insurance. Built using Microsoft Azure, the effort will create a shared database that logs information about shipments, as well as potential risks, in order to help companies comply with world-wide insurance regulations. Just as an example, let’s consider the complex topic of how marine insurance needs to be dynamically adjusted depending on the exact location of the ship, say whether a ship enters a war zone or not. The war zone, maybe multiple war zones, and their entry-exit notifications, dictate major changes in insurance costs, with up to the minute ramifications on hundreds of attributes related to grid reference, sanctions, policy, cargo value, license, credit, premiums etc. which dynamically generated seriously large amounts of data, that needs to be analysed just-in-time, to provide the best advice to shipping companies, insurers, and a complex jumble of brokers and underwriters. It is only one hyper-complex aspect of marine insurance, there are many more which involve such high value data that is imperative to be trustworthy and real time. The systems negotiating that data similarly need to produce business acumen, that is predictive and insightful. Maersk, teaming up with Microsoft on the Azure platform went through a 20 week test, using KSI, a blockchain developed by Guardtime, a startup, from… well, even this might not come as a big surprise…, Estonia, the east European nation contributing heavily in Blockchain development with its well-educated, tech-savvy IT workforce. The platform was designed jointly to make auditing aspects of a shipping supply chain easier, and to improve the tamper-resistance and sharing of data in realtime. As in the case of marine insurance, it’s critical that many different parties are enabled to settle upon the terms of premiums in a timely and cooperative fashion.
And it’s certainly not the flavour of the month for a few, Maersk is one of many companies putting blockchains to the test. Q3 last year Walmart joined forces with nine other companies, including Unilever, Nestlé, Dole, and IBM, to explore blockchains’ potential to improve food safety. So, is this disruptive, or what? Well, according to Bill Pieroni, president and CEO of ACORD, an insurance standards giant, “the technology (blockchain) has the potential to dramatically reduce time, cost and risk across the entire insurance value chain, it’s ground breaking”. We agree.