IBM and logistics company Maersk have called time on TradeLens, the blockchain-backed supply chain platform that came online for the first time in 2018, citing a “lack of global industry collaboration” for its demise. It is due to cease operations early next year, and the second IBM-backed blockchain trade platform to get the chop this year.
TradeLens was designed to be an industry-supported supply-chain data, document, and analytics platform that could be used by importers, exporters and anyone else involved in global trade, making use of distributed blockchain technology for its backend.
The document-sharing platform helped simplify workflows through a set of digital supply-chain visibility, collaboration and analytics tools. As well as IBM and Maersk, the project had support from a number of carriers, customs organisations, banks and transport providers to create an information ecosystem.
Within its first year, there had been 500 million shipping events and documents lodged on the supply-chain blockchain platform that was built with open governance and open APIs to make it easier for more widespread collaboration.
It worked by tracking and processing supply chain data from every shipment made around the world in real-time, then putting a distributed and immutable record of what happened on the blockchain that everyone involved could access and validate. TradeLens had 150 supply-chain companies connected to the blockchain including shipping companies, others providing logistic solutions and even port operators.
Why has TradeLens shut down?
This shared data was essential for its operation and while it gained some major partners, including ocean cargo carriers CMA CGM and MSC Mediterranean Shipping, the platform never reached the critical mass required to become commercially viable and self-sustaining.
IBM says the platform saved companies on the blockchain about 20% in documentation costs and reduced the shipping time for goods by as much as 40%, thanks to more transparent records that were more secure due to the immutable nature of the blockchain technology. It wasn’t an ideal solution though as it came with privacy and scalability issues that relied on extensive industry collaboration for full operational success, something that both IBM and Maersk struggled to attract.
“TradeLens was founded on the bold vision to make a leap in global supply chain digitisation as an open and neutral industry platform,” explained Rotem Hershko, head of Business Platforms at A.P. Moller Maersk. “Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved. As a result, TradeLens has not reached the level of commercial viability necessary to continue work and meet the financial expectations as an independent business.”
He added: “We are deeply grateful for the relentless efforts of our committed industry members and many tech talents, who together have worked diligently to advance the digitalisation of the industry through the TradeLens platform.”
Future for blockchain
Maersk says it is going it alone to digitise its supply chain business and increase industry innovation, including yet-to-be-revealed solutions that are designed to reduce trade friction. “We will leverage the work of TradeLens as a stepping stone to further push our digitisation agenda and look forward to harnessing the energy and ability of our technology talent in new ways,” said Hershko.
It may prove worthwhile pursuing the technology, as a study into the impact of blockchain technology on the shipping world by Kelly Gerakoudi-Ventouri from the American College of Greece found that while still immature, blockchain technology holds a lot of promise for the shipping industry.
Published in the Journal of Shipping and Trade, the paper states: “The technology is expected to become significant to industry and society, offering the advantages of decentralisation, cost reduction, and improved efficiency. It can be used in other transportation industries to simplify operations, enhance decision-making, and contribute to organisational efficiency and competitiveness.”
It isn’t the first time IBM-backed blockchain technology has faced the chopping block. Finance platform we.trade ran out of funds earlier this year and was forced to shut down. The blockchain-based trade finance platform was backed by IBM and 12 of the biggest names in finance but failed to raise additional funds.
Much like global shipping trade finance had been touted by many financial institutions as an area where blockchain could prove transformative, but we.trade’s apparent failure may suggest the market is not yet ready to embrace the technology.