Attend any global trade conference this year and one thing is abundantly clear: 2018 is the year of blockchain. Even as capacity issues plague the industry and trucking rates soar, blockchain is the bitcoin-based buzzword on the tip of everyone’s tongue.
According to Techgistics, “The global logistics market is predicted to reach US 15.5 trillion in 2023.” While global trade has run the world for centuries, the processes behind it are still stuck in the last millennium. A fact that isn’t lost on some of the industry’s oldest carriers as well as a slew of start-ups, all aiming to be the world leader in supply chain digitization.
The benefits and platitudes concerning blockchain have been sung far and wide. Thus far we’ve been promised:
- Billions in savings
- Greater supply chain transparency
- Enhanced cybersecurity
- Error reduction
These are all fantastic and welcome innovations for an industry ripe for disruption, but with goals this lofty one has to have standards. Right now, the biggest problem blockchain faces is that while many companies are developing supply chain based blockchain solutions, few are collaborating with one another to standardize their solution.
The Old Guard
Digital disruption and emerging technologies in logistics are converging on a battlefield littered with archaic thinking, feuding carriers, and the scars of corporate culture clashes. Nowhere was this more evident than at the annual Global Liner Shipping Conference in Hamburg.
“Technically the solution (by Maersk and IBM) could be a good platform, but it will require a governance that makes it an industry platform and not just a platform for Maersk and IBM. And this is the weakness we’re currently seeing in many of these initiatives, as each individual project claims to offer an industry platform that they themselves control. This is self-contradictory,” said Hapag-Lloyd CEO Rolf Habben Jansen at the conference. “Without a joint solution, we’re going to waste a lot of money, and that would benefit no one.”
The Maersk and IBM blockchain solution is a joint venture, which will be its own company, that Maersk owns a 51% share in. The aim of the project is to create a global standard for blockchain that can be used across the shipping and supply chain ecosystem. IBM’s Head of Global Trade Digitalization, Norbert Kouwenhoven, told ShippingWatch last year that “There are 27 billion euros of savings to gain between the supply chain partners just from efficient sharing of information”.
Savings to gain also equals profit to be had and in a tight carrier market other steamship lines aren’t ready to drop on anchor on the idea of a Maersk controlled digital freight ecosystem. In fact, CMA CGM general manager Peter Wolf, echoed Hapag-Lloyd’s stance regarding IBM / Maersk’s blockchain program. Not because Hapag-Lloyd and CMA CGM were presenting their own solution, instead they believe that there are too many similar blockchain solutions on the market.
Accenture and Kuehne + Nagel are developing their own blockchain application that, according to their press release, could reduce data entry by 80% and save the ocean shipping industry hundreds of millions of dollars annually.
Perhaps Hapag-Llyod and CMA CGM do have a point. With multiple steamship lines creating solutions independent of one another there are sure to be interests, both logical and competitive, that contradict the purpose of the universal standard that blockchain is supposed to provide.
A New Challenger Enters
If there’s money to be had and disruptive technology to be developed it’s usually not the stalwarts of old industry that stand to benefit. In fact, should an industry that has been content for this long using outdated technology be the stewards of our digital future?
Napster, Netflix, Amazon, Uber, Airbnb, and Bitcoin. All tech that wasn’t born in the boardrooms of Capital Records, ABC, Walmart, or The Hampton Inn but instead came from dire need to innovate in order to meet market demands. Often times creating markets consumers had no idea they needed and now can’t live without.
The same ideas, fresh outlook, and most importantly, venture capital that helped make those companies the industry leaders that they are today is now giving birth to a new breed of startups. Companies not concerned with quarrels over industry standards so much as creating solutions that meet market demands.
Instead of worrying about which carrier is doing what, many blockchain startups are asking what technologies most benefit the solutions that they’re developing. Such as using the IoT or Internet of Things to authenticate the ledger, enhance security, and supplement their blockchain solution.
As Medium recently reported, “IoT solutions based on the blockchain simplify business processes within supply chains and improve consumer experience by providing better security and reducing expenses.”
Earlier this year Techgistics named their 4 innovative blockchain startups to watch in 2018. Neither of the 4 companies, ShipChain, FreshTurf, OriginTrail, nor CargoX aim to set a standard for the other. Instead they recognize that supply chains are inherently diverse and unique as are shippers’ needs and demands.
The fact that the shipping industry is starting to embrace technology shouldn’t be lost in the debate over who’s blockchain is best. The fact that we’re even having these discussions online and at conferences is a tremendous sign of progress.
Whether it’s Maersk / IBM with a blockchain solution developed from inside the industry or a nimble startup outsider, one thing is for certain: if blockchain can simplify business processes within supply chains and improve consumer experience by providing better security and reducing expenses then that’s something we’ll all be using sooner than later…regardless of its developer.
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