IBM and Maersk struggled to get their blockchain-backed shipping project off the ground, having to restructure their joint-venture agreements to assure the rest of the industry that it wasn’t going to be anti-competitive. Well, the move appears to have paid off, and TradeLens has announced that with two new members, Hapag-Lloyd and One, it now represents the carriers of more than half of global ocean container shipping volume.
Both Hapag-Lloyd and Ocean Network Express (ONE) have joined, and both will operate one of the blockchain nodes that powers TradeLens, determining the consensus for the shared ledger of transactions. They will be validating these transactions, hosting data, and acting as the network’s Trust Anchors. Both are also taking seats on the advisory board.
Shipping is burdened by its reliance on paper documentation and the need for brokers to organize and negotiate carriage between multiple different stakeholders in the chain. Because of this reliance on legacy systems, it was ripe for disruption, but because of the scale of the challenge, a shiny new startup had no hope of steering the course of this ship. No, change needed to come from the top, and so Maersk partnered with one of the most influential players in the blockchain market, IBM, to try and get the ball moving.
There were clear advantages to be had for both the shipping customers and the carriers, as well as the ecosystem that has sprung up alongside them. Customers should be able to better see availability and pricing, and could even track their goods through the chain as they are moved around the world. The carriers and ports would have to deal with less red tape and paperwork, if TradeLens took off, and the process could significantly reduce the time it takes to process containers and goods onto and off of their ships.
Visibility was another key benefit, with a blockchain-based system able to connect and share data between users. This data might be used for analytics and business intelligence applications too, and as these ships are the most heavily polluting vehicles on earth, optimizing their usage is of paramount importance.
The usual benefits of data analytics are also in play here, with TradeLens saying that its members gain a comprehensive view of their data, and can collaborate as cargo moves around the world, helping to create a transparent, immutable record of transactions.
This architecture could also allow for a whole host of third-party data benefits, with government bodies and researchers able to trawl through the list of transactions to look for patterns and correlations – especially useful in traceability and criminal investigations.
“Through improved trust, simplicity and improved insight into provenance, blockchain solutions such as TradeLens are delivering proven value across business processes for our clients and their ecosystems. Massive new efficiencies in global trade are now possible and we’re seeing similar effects across the food industry, mining, trade finance, banking and other industries where the value of blockchain is more apparent than ever before”, said Bridget van Kralingen, SVP, Global Industries, Clients, Platforms & Blockchain, IBM.
Back in August 2018, TradeLens finally got its name, after the two moved it from the pilot to the early adopter stage, with 94 companies having already signed up. However, the two had to change it from an official joint venture to a joint collaboration, along with a new ownership model that hasn’t been elaborated on. At first, IBM held 49% and Maersk had 51%, but the pair remain the only owners despite the restructure.
The revenue sharing system was also reworked. Now, whichever company sells access to TradeLens will keep the fees and revenue from that deal, a model that apparently lets the pair bring TradeLens to market faster, and in a more flexible manner than the old joint-venture approach. The two companies still jointly own TradeLens’ intellectual property though.
However, only a couple of months later, the pair said they were having trouble signing up shipping carriers to TradeLens, who understandably still viewed the platform with skepticism, despite Maersk’s promises that it was open and neutral. IBM Blockchain’s head of TradeLens, Marvin Erdly, conceded “we do need to get the other carriers on the platform. Without that network, we don’t have a product. That is the reality of the situation.”
Finally, in May this year, TradeLens netted its first major shipping carriers, MSC and CMA-CGM, the second and fourth largest firms in the world. As Maersk it still the largest, this gave TradeLens great reach, especially as smaller firms PIL, Zim, and Hamburg Sud were also on board.
Now, Hapag-Lloyd and Ocean Network Express (ONE) have signed up; the fifth and sixth largest shipping carriers respectively. TradeLens, now speaking for itself, says this represents over half of global ocean container cargo. Collectively, TradeLens users will have access to three major ship-sharing alliances on the platform.
“TradeLens has made significant progress in launching a much-needed transformation in the industry, including its partnership model. Now, with five of the world’s six largest carriers committed to the platform, not to mention many other ecosystem participants, we can collectively accelerate that transformation to provide greater trust, transparency and collaboration across supply chains and help promote global trade” said Martin Gnass, Managing Director Information Technology at Hapag-Lloyd.