Blockchain Takes a Victory Lap
As 2018 drew to a close, it appeared that Blockchain’s future was about as stable as the value of Bitcoin. In the world of logistics, headlines began to appear about difficulties that Blockchain-based trade platform TradeLens was having in attracting carriers and logistics companies.
The November 2018 announcement by CMA-CGM and several other leading vessel and port operators of a Blockchain platform -- named Global Shipping Business Network (GSBN) -- raised concerns of fragmentation that would threaten Blockchain’s scalability. NYU Professor and Economist Nouriel Roubini even went as far as to describe the technology as a “scam.”
Oh, what a difference a couple of quarters can make in the world of technology!
The events of the first half of 2019 have put to rest any questions about the fate of Blockchain in the logistics industry. Here’s a look at some of the key events that unfolded in the past few months:
- In mid-April, Israeli carrier ZIM Integrated Shipping announced that it would join TradeLens, making it the fourth carrier to do so along with Maersk, Singapore based PIL, and Seaboard Marine. ZIM’s global service offerings bring much-needed diversity to TradeLens users.
- Maersk’s acquisition of customs house brokerage firm Vandergrift not only takes TradeLens out of Europe but begins the process of integrating a crucial piece to any full-service blockchain in logistics solution: seamless international trade compliance.
- The Canadian Border Services Agency and Livingston International signed on to a pilot project with TradeLens, further extending the reach of the blockchain platform into the crucial North American trades.
- The biggest development of course came at the end of May 2019 when CMA-CGM and MSC announced that they are joining TradeLens. This development provides TradeLens with the scale that it requires to be a global platform as evidenced by its claim to now have 50% of world trade data passing through it.
The significance of CMA-CGM, MSC, ZIM and other competitors participating in a Maersk-owned platform is difficult to overstate, and while the implications and opportunities may take some time to play out, the steamship lines have shown that they’re smart enough not to get bogged down in a fight over tech standards.
The undeniable outcome of this activity is clear: the future of international trade will be built on Blockchain.
Why Blockchain? There are several reasons:
- A One-Horse Race - Does anyone remember hearing of an alternative technology that was being considered? There certainly wasn’t any outcry from EDI supporters. Blockchain technology really was the only choice due largely to the authenticity and speed it brings to transactions.
- Real-Time Authenticity - Distributed ledger technology is inherently built to convey authenticity by displaying the “touches” of, or changes to, data recorded on it. The speed of logistics transactions, coupled with today’s computing power, allow Blockchain-based systems to deliver data faster than ever before. Case in point: a payment of freight charges to MSC in Savannah will result in an instantaneous release in Jebel Ali on a Blockchain solution. Contrast that to the current throughput time of a telex or email release with adjustments for time zones, manual inputs and costs due to accrued demurrage or detention.
- Scalable Distribution - In show business, content needs distribution. Similarly, the massive data volumes (content) of international trade and logistics need a vehicle (distribution) that can rapidly scale and deploy around the world. Blockchain platforms offer a uniquely symbiotic relationship with Big Data.
- Open Source - As Blockchain is an open-source technology, it’s generally not restrictive to build on or operate. Hence launching GBSN as a parallel platform to TradeLens was an easy and logical move, just to ensure against platform monopoly. Moreover, new Blockchain and other DLT platforms will proliferate, and interoperability amongst them will be inevitable. Case in point: the Canadian Border Services Agency, or any other customs service, will no longer need to mandate mapping protocols, thereby making it faster than ever before to file customs entries and obtain releases. The downstream effects of a simple customs release that could be secured potentially weeks in advance of arrival will have transformative results for the speed of logistics
So Blockchain wins, but what does that mean for your business?
- Freight Forwarders & NVOCC’s: You never owned the ships and you never owned the goods and yet you always paid for tracking, sailing schedules, and document transmittal via EDI or manual labor. Platforms, tracking standards and Blockchain distribution/connectivity will solve these problems, making your business more productive and cost-efficient than ever before.
- Logistics Technology Companies: Platforms, universal standards and API’s make it extremely easy to develop new apps and solutions while also facilitating distribution on a potentially global scale. The ability to build apps for logistics and international trade will likely create significant growth opportunities for your business in the years to come. Also, interoperability between a growing number of platforms will probably create consulting and middleware development revenue opportunities.
- Steamship Lines: It’s still too early to tell. The rapid, wide-scale adoption realized in a small universe of liners, ports, and logistics companies will not be easy to replicate in the fragmented markets of cargo owners and NVOCC’s. Nonetheless, it was necessary to bring liner shipping into the age of the internet, and the ability to so without a dog fight over standards deserves applause.
- TradeLens, GBSN and “The Platforms:” Get used to thinking of yourselves as customer-driven entities separate from the steamship lines. In a very short time logistics platforms have gone from “concepts” to becoming entirely new stakeholders in the world of shipping, logistics and international trade. Your opportunity is to be more valuable than container shipping itself.
Carrier websites, TMS suites, ports and container yards, etc. are all going to migrate from EDI to API’s and still might not be equipped for Blockchain. There are upgrade cycles yet to begin, legacy costs to amortize and account for, and then finally the new “Blockchain ready” systems will be in place. The good news is that we now have a destination, and that’s the first crucial step of any journey.
By: Fauad on June 20, 2019, 2:38 p.m.