Maersk & IBM’s BlockChain Collaboration Stalls
Big news hit in January when it was announced Maersk and IBM were forming a joint venture. The giants in international shipping and information technology, respectively, were introducing a blockchain-based platform to revolutionize the international shipping industry.
This was such a big story that we didn’t just blog about it, we made a video about the joint venture:
Optimism around Maersk and IBM’s blockchain platform was that it would be running strong by the midpoint of this year, creating transparency in the industry and reducing costly delays. However, the year is almost over without Maersk and IBM’s platform having caught on.
It is not as though blockchain technology doesn’t have huge potential to make improvements in the international shipping industry. In fact, just earlier this month we posted a guest blog by Kristin Savage about the 6 ways blockchain technology can transform logistics.
So what’s the problem with IBM and Maersk’s blockchain platform, which they’ve been working on since 2016?
In actuality, there’s probably nothing wrong with the platform. The problem is who owns it. Not IBM but Maersk.
Ian Allison puts it well in the opening sentence of a CoinDesk article on the topic:
It’s hard enough to get enterprises that compete with each other to work together as a team, but it’s especially tricky when one of those rivals owns the team.
Other carriers don’t want to sign up for a platform owned by probably their fiercest competitor. That leaves TradeLens, which is what Maersk and IBM’s blockchain-based platform is called, in trouble.
A quote in Allison’s article illustrates just how dire the situation is for the joint venture:
“I won’t mince words here – 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.” [Marvin Erdly, head of TradeLens at IBM Blockchain] told CoinDesk.
According to the article, outside of Maersk, only one carrier, Pacific International Lines (PIL), has signed onto the platform.
This response, or lack of response, from Maersk’s competitors isn’t all that surprising. Who wants to give their competition any extra advantage?
According to [Lars Jensen, CEO of SeaIntelligence Consulting, a Copenhagen-based shipping analyst firm], “The other carriers [in response to the blockchain proposition] basically said, ‘sure, maybe – tell us a bit about it. And by the way, if we do this then who owns the IP rights?’ Whereupon they were given the answer that the IP rights would be for Maersk and IBM.” He added:
In a word: no.
Maersk and IBM’s blockchain-based platform isn’t exactly dead in the water.
…. IBM and Maersk have signed scores of participants from other parts of the shipping supply chain to join the TradeLens platform. These include an array of global port and customs authorities, beneficial cargo owners, freight forwarding and logistics companies (the Port of Montreal and Canada Border and Services Agency are the latest additions).
Allison also brings up that Maersk and IBM have competition when it comes to launching a blockchain-based platform in international shipping:
Accenture has onboarded Singapore-based shipping carrier APL (American President Lines, 12th largest by cargo volume) and freight forwarding giant Kuehne + Nagel to a blockchain pilot involving brewing giant AB InBev and a European customs organization.
Even if Maersk and IBM do manage to pull other carriers into TradeLens and beat the competition from Accenture, that is no guarantee of the success of the new platform. While there certainly is optimism about what a blockchain-based platform can do for the international shipping industry, there is also some skepticism too.
Back in August, Eric Johnson wrote in a Journal of Commerce (JOC) article:
Last week’s launch of Maersk’s and IBM’s blockchain platform, called TradeLens, was met by encouragement but also skepticism of its benefits to shippers, broader claims of productivity, and who’s verifying the latter.
The discussion is a microcosm for how shippers and the broader logistics industry is wrestling with a few key questions regarding blockchain: its cost, its imminent applicability, which parties will provide solutions, and whether there is value in being an early adopter.
That JOC article is certainly a good read for getting a better feel for the conversation about the potential of blockchain technology in the international shipping industry.
How things play out with TradeLens will certainly be worth keeping an eye on.