In January 2018, IBM and Maersk teamed up to find a blockchain-based global shipping supply chain solution. However, there were doubts about the nature of interactions on a blockchain platform since there was no privacy, which is something that shipping companies value. However, the platform is getting new high profile members, a proof to the robustness of the solution. Recently MSC, CMA CGM have boarded IBM-Maersk's shipping blockchain platform.
The breach of traditional business model
The shipping industry can be credited as the first genuinely global industry which has existed for centuries. Shipping remains a crucial part of global trade today. Notably, this sector was worth $12 trillion in 2017. In 1980, shipping companies ferried just 102 million metric tons of goods, which grew to 1.83 billion metric tons in 2017, according to Statista. The increase in tonnage is majorly attributed to the vessels increasing their capacity, as well as consumer demand.
While the increase of tonnage and value of goods shipped have been growing, operations within the industry have remained mostly unchanged for the period. According to the United Nations Conference on Trade and Development (UNCTAD), there is a need for effective integration of the shipping industry into the world economy, and this is only possible if port systems are functioning correctly. That is why the institution came up with the UNCTAD Port Management Program to strengthen this function.
Digitization through blockchain
UNCTAD recognizes that digitization of the shipping industry is crucial to the integration. In this regard, IBM and Maersk came together to establish TradeLens, a blockchain platform that automates operations in the shipping industry. The benefits of blockchain technology give a platform for shipping lines the opportunity to interact directly without intermediaries. Also, the data which shipping lines share over the platform is accessible to all accredited users and is immutable.
In particular, TradeLens has three components. The blockchain component enables companies to track goods along the supply chain while the API component enables organizations to create applications on top of the TradeLens platform. The third component is a set of standards which governs the sharing data among users.
However, the platform initially faced challenges as rival companies felt unprotected in their strategy since all users had access to data on the platform. IBM and Maersk have since taken necessary measures to ensure that data is accessible only to permission parties. As such, more companies are seeing the need to take advantage of the potential of TradeLens.
Newly added members
MSC Mediterranean and CMA CGM are the latest major shipping lines to join the TradeLens community. Added them to the existing members, the TradeLens consortium now accounts for approximately half of the cargo container shipments transported among the world’s ports.
The primary attraction of the platform is the avoidance of the traditional paper-intensive process of handling shipments. The underlying blockchain technology ensures that data is safe and visible to permitted participants. Also, the data flow in real-time, which makes auditing faster and more efficient. Ultimately, the continued onboarding of significant players is proof that blockchain finds its place in the mainstream.
This collaboration is just another example of how blockchain is going mainstream and impacting our future for the better.
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