Today TradeLens announced the addition of the world’s fifth and sixth largest shipping carriers Hapag-Lloyd and Singapore-based Ocean Network Express (ONE). TradeLens is the joint digital shipping platform from IBM and Maersk. It’s only been slightly over a month since TradeLens announced the addition of MSC and CMA-CGM, respectively the second and fourth largest carriers.
Carriers signed up to TradeLens now represent more than half of the world’s container cargo capacity. Chinese shipper COSCO is the only absentee amongst the top six shippers. COSCO was one of the drivers behind the competing Global Shipping Business Network (GSBN) in conjunction with CargoSmart.
The latest TradeLens additions join previous adopters, Maersk subsidiary Hamburg Sud as well as the world’s tenth and eleventh biggest carriers Pacific International Lines (PIL) and Israeli shipper ZIM.
|Shipper||Capacity (TEU)||Network member|
Capacity source: Marine Insight, ZIM.
“TradeLens has made significant progress in launching a much-needed transformation in the industry, including its partnership model,” said Martin Gnass, Managing Director Information Technology at Hapag-Lloyd. “We can collectively accelerate that transformation to provide greater trust, transparency and collaboration across supply chains and help promote global trade.”
Digitization and reliable exchanging of information for shipping containers are some of the primary goals of the platform. Because most documents are digitally signed, it’s also easier to prove authenticity.
It wasn’t long ago that many said that Maersk competitors would not consider joining. Todd Scott, VP of Blockchain Global Trade at IBM, acknowledged the issue. He said that a year ago, people were saying “I just talked to my contact at XYZ carrier, and they said ‘No way, Jose.’ Now he’s hearing from the same people who are saying: “Wow, we are so excited about this turn and this change.”
So the big question is, how did IBM and Maersk turn it around? “We knew it was a matter of time,” said Scott. “It takes time to do these hard things and secondly once carriers, once forwarders, once BCOs [beneficial cargo owners] have an opportunity to spend time with the technology and the platform they all walk away and say, wow this is pretty well done.”
He believes one aspect is that TradeLens addresses a real business problem by tackling the inefficiencies in the shipping industry. Scott also emphasized the need to understand the ecosystem participants, and more importantly, how to engage them. “Because that is the number one issue that most people who are building blockchain solutions, that they struggle with,” said Scott.
TradeLens is a joint initiative between Maersk and IBM, and companies that sign up to Tradelens contract with one or the other. We speculate that these big carriers were likely signed up by IBM. But the company would not be drawn on the details. However, Scott commented that there’s an expectation that each of them would sign roughly half the business. While both companies have significant value to bring to the solution, only one of them has a sales machine and major track record of software sales.
What about freight forwarders?
The carriers are major players in the ecosystem. Another is the freight forwarders where TradeLens has not yet made headlines, and where Ledger Insights has heard naysayers. One example is the world’s biggest shipping freight forwarder, Kuehne + Nagel, which is developing another platform in conjunction with Accenture.
Talking about freight forwarders in general and the turnaround in carriers joining TradeLens, Scott commented: “I suspect we’ll see, read and hear about the same on the forwarder side.”
Some of the carriers have freight forwarding divisions where TradeLens is cutting its teeth. Scott sees them as an essential part of the ecosystem. He spoke about sophisticated clients that “as a matter of managing their risk, they may have 8-10% of their business that’s going through a forwarder. For some clients, they use a forwarder 100%. So we know that’s going to be a critical part of what we do.”
But he also believes that as the carriers add more data to the platform, in turn, TradeLens becomes more valuable to the forwarders.
From a big picture perspective, the entire purpose of TradeLens is interoperability between different players in the ecosystem. As a first phase, it needs to enable the carriers, forwarders, customs, ports and other participants to be able to integrate. That is happening by connecting with their legacy systems using APIs that support industry standards.
Other industries with their own blockchain networks will also need to interoperate, for example, for payments. One of the newer ecosystem players is marine insurance, and there are two ways in which it could participate in TradeLens. The first would be a button to add protection to a shipment. And the second would be for the insurers to run risk assessments by accessing publicly available data on the status of containers. Some trade lanes such as East Africa are riskier than others.
Last year Maersk spoke about how insurance premiums could potentially adjust as vessels enter into more risky waters. While IBM would not comment, Maersk was the first carrier participant in Insurwave, the marine insurance platform developed by EY and Guardtime.
Scott also spoke about the potential for integration between IBM’s Food Trust and TradeLens and IBM is already having detailed discussions with clients around that.
There are also several competitors to TradeLens, including the GSBN where TradeLens member CMA-CGM is also a participant. Plus IBM’s partner Samsung SDS is working with the Port of Rotterdam (also a TradeLens member) and ABN Amro on interoperability platform DELIVER.
“There’s not a world that we see where’s there’s only going to be one platform. We don’t see that, we think it’s still going to be a network of networks,” said IBM’s Scott. Hence interoperability will prove crucial. “They [clients] want to make sure that the bets that they make are not going to go to waste.”