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Business Decision of the Year: Maersk and IBM team up to form TradeLens

That year, blockchain as a concept began to take off, and IBM and Maersk launched a series of what they called “thinking workshops.” The purpose, Kastrup said, was to determine what the concept could look like in practice and develop pilots to test it.

Left and right, startups were unveiling blockchain-based platforms. The technology, they said, would revolutionize the world. Supply chains, they thought, could be one of the first big beneficiaries.

But even then, as the venture capital world was abuzz with hopes and dreams, executives saw it as a technology looking for a solution, and its widespread adoption an unlikely reality.

Then, in January 2018, Maersk and IBM decided to start the new year with a bang.

Together, they sought to form the supply chain’s preeminent blockchain solution, called TradeLens. It was a perfect partnership: a technology giant and the largest container shipping company in the world. Within months, dozens of players signed up to test the solution.

By the end of the year, blockchain — still abuzz — was no longer just a dream.

The Maersk-IBM blockchain solution could fail to catch on, but that would not make the decision to start it any less consequential.

Early on, critics of the solution argued instead of sowing unity for supply chains, the fact that it was led by Maersk Line —  the biggest ocean carrier — meant shipping lines would distrust the solution. Hapag-Lloyd’s CEO reportedly said as much at the Global Liner Shipping Conference in May.

True to form, by November 2018, nine companies – including the major carriers of COSCO, CMA CGM, Evergreen Marine, OOCL and Yang Ming – had decided to form their own blockchain solution. The solution, built by CargoSmart and called the Global Shipping Business Network (GSBN), also has the backing of several terminals and ports.

The new rivalry — of TradeLens versus GSBN — may force new challenges for both endeavors, as the companies compete for adoption.

But in the course of a year, and in this industry, the idea of blockchain for shipping has transcended from a business experiment to a real race. Winning, now, is contingent on how many supply chain partners can be convinced to join a side.

A global opportunity

Maersk had been thinking about the sources of friction in ocean shipping for years by the time IBM came along, Lars Kastrup, the TradeLens lead at Maersk, told Supply Chain Dive.

He said Maersk began to engage in discussions about digitalizing the industry, at least as far back as 2010. At the time, customs authorities in the Netherlands were pushing for a solution to help remove excessive paperwork from trade.

“Obviously we supported the idea back then,” Kastrup said. He explained global shipping typically grows at the rate of global GDP, but if the industry digitalized, Maersk believed it could grow by up to another 15%.

As of 2010, however, digital initiatives had yet to deliver the quantum leap the industry needed. By 2016, though, the landscape had changed.

That year, blockchain as a concept began to take off, and IBM and Maersk launched a series of what they called “thinking workshops.” The purpose, Kastrup said, was to determine what the concept could look like in practice and develop pilots to test it.

 

Image credit: IBM

Source: SupplyChainDive

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