Technology

Latest IBM-Maersk deals mean half the world’s ocean cargo will now be tracked on a blockchain

Container shipping consortium gains key allies in MSC and CMA CMG lines

With the addition of two new container shipping lines, IBM’s blockchain-based TradeLens consortium now accounts for nearly half of the world’s shipping.

Developed by IBM Blockchain and the world’s largest shipping firm, A.P. Moller – Maersk, the TradeLens Consortium announced today that it has added No. 2 Mediterranean Shipping Company (MSC) and No. 4 CMA CGM container lines. Together, the three lines have 1,740 ships with a capacity of around 10 million standard TEU shipping containers.

The announcement gave the year-old blockchain consortium a big boost in building the base of competitors it needs to survive and thrive. Already, 500 million separate transactions have been recorded on the TradeLens blockchain, and that is growing by 1.5 million per day, IBM said in a release.

That is a feat industry blockchain consortia are finding difficult. Getting competitors to agree to work together, even on projects from which all will benefit, is tricky, said Susan Joseph, who until recently worked with blockchain firm B3i, which is building an industry consortium in the reinsurance industry.

“The technology is hard, but the people are harder. It is really a social question,” Joseph said during a panel titled “Herding Cats: The Art of Building Enterprise Consortia,” at Coindesk’s Consensus 2019 conference. “You’re putting a bunch of competitors together and you’ve got to trust them. Only, you never did before. That is, I think, the major problem.”

Harvard security technologist Bruce Schneier specifically called out the Maersk-IBM project in a February 2019 Wired article arguing that blockchain falls down as a “trustless”—that is, relying on cryptography, not human trust—system.

“Even though the blockchain systems are built on distributed trust, people don’t necessarily accept that,” Schneier wrote. “For example, some companies don’t trust the IBM/Maersk system because it’s not their blockchain. Irrational? Maybe, but that’s how trust works. It can’t be replaced by algorithms and protocols. It’s much more social than that.”

Yet TradeLens appears to be overcoming that hurdle with three of the top four shippers, as well as major customers like Procter & Gamble, trucking and rail firms, port operators, logistics firms, financial services companies, and even enforcement agencies like U.S. Customs and Border Protection.

France’s CMA CGM is a particularly big win, as the company publicly rejected TradeLens at the 2018 Global Liner Shipping Conference in Hamburg last May, saying it was unconvinced the Maersk-built platform could become a common standard.

On Tuesday, Rajesh Krishnamurthy, executive vice president, IT & transformations CMA CGM Group, said that with its “commitment to open standards and open governance … [the] TradeLens’ network is already showing that participants from across the supply chain ecosystem can derive significant value.”

IBM said that a key to TradeLens’ success is it “commitment to data ownership rights and permissioned access to data [that] helps ensure privacy and confidentiality while enabling users to collaborate more efficiently with real-time access to shipping data,” in the release.

Both CMA CGM and MSC will become node operators and Trust Anchors, acting as transaction validators for the network. And both will join the TradeLens Advisory Board, which advises on standards for neutrality and openness.

“More than a hundred participants have put their trust in the TradeLens network and are gaining greater transparency and simplicity in the movement of goods,” said Bridget van Kralingen, senior vice president, global industries, clients, platforms & blockchain for IBM. “Together we are advancing a shared aim to modernize the world’s trading ecosystems.”

That need for collaboration is another key to TradeLens’ success, said André Simha, chief digital & information officer of Switzerland-based MSC.

“Digital collaboration is a key to the evolution of the container shipping industry,” he said. “The TradeLens platform has enormous potential to spur the industry to digitize the supply chain and build collaboration around common standards.”

That participation from all parts of the shipping supply chain is vital, added Vincent Clerc, chief commercial officer of Denmark-based Maersk.

“Increasing ease of doing business for our customers and providing visibility across the container journey is at the center of the Maersk strategy,” he said.

For major cargo shippers like consumer goods multinational Proctor & Gamble, industry-wide adoption of TradeLens would be a huge benefit, said Michelle Eggers, director global logistics purchases for P&G. “Whether filled with our products or the materials used in production, understanding the status of our containers helps us manage an efficient supply chain.”

Leo Jakobson, Modern Consensus senior editor, is a New York-based journalist who has traveled the world writing about meeting and incentive travel, as well as the consumer and employee loyalty business. He also covered the East Coast side of the Internet boom and bust, small businesses, and New York City crime, nightlife, and politics. Disclosure: Jakobson owns no cryptocurrencies.

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