Published on the 06/12/2022 | Written by Heather Wright
Tradelens follows ASX Chess replacement project…
Five years after launching in a blaze of fanfare, Maersk and IBM are shuttering the TradeLens blockchain-enabled global trade platform after an apparent lack of interest – and trust – from the industry.
The much-hyped offering, launched in 2018 as a joint venture between IBM and Maersk division GTD Solution, promised to build a world of secure paperless trade, but Maersk has have now announced it was unable to reach commercial viability and it has begun to close down the platform.
“The need for full global industry collaboration has not been achieved.”
The failure, and admission from Maersk that even with the might of the two companies combined they were unable to reach commercial viability, is another blow to blockchain, following hard on the heels of the ASX ending its six-year blockchain-powered Chess settlement and cleaning system project. That project – which lead to a $250m writedown – was this week labelled a ‘profound failure’ by Senator Deborah O’Neill, chair of the parliamentary joint committee on corporations and financial services
Open to shipping and freight operators, Tradelens was designed to address industry issues including cumbersome and often expensive peer-to-peer messaging and inefficient clearance processes, according to Maersk, and uses distributed ledger technology to provide a shared, immutable record of transactions, enabling permitted trading parties to gain access to data in real-time.
On launch, the companies said blockchain would not only power the new platform, but allow for the deployment of other cloud-based open source technologies including analytics AI and IoT, enabling more accurate movement and tracking of goods across international borders.
Companies however, were apparently less convinced, and reluctant to share information.
Despite Tradelens claiming some early wins – it noted 94 organisations ‘actively involved or agreeing to participate’ at its official launch, including more than 20 port and terminal operators, customs authorities in countries including Australia, and global container carriers including Hamburg Süd and Pacific International Lines – the network failed to gain the critical mass required.
Rotem Hershko, AP Moller Maersk head of business platforms, says TradeLens was founded on the bold vision to make a leap in global supply chain digitisation as an open and neutral industry platform.
“Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved,” Hershko says.
“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.”It was always an ambitious project – and comments back in 2019 would foreshadow its demise.
Bridget van Kralingen, IBM Global Industries, Solutions and Blockchain senior vice president, noted at the time that ‘Success with the technology rests on a single factor – bringing the entire ecosystem together around a common approach that benefits all participants equally’.
IBM Blockchains head of Tradelens, Marvin Erdly, was even more blunt, saying without the network of carriers on the platform ‘we don’t have a product’.
Mark Bourdon, senior vice president, commercial agencies network for container carrier CMA CGM also hinted at the issue when CMA joined the network, noting that ‘an industry-wide collaboration like this is truly unprecedented’.
TradeLens, run on IBM Hybrid Cloud and IBM Blockchain, did rally organisations around the platform. It had more than 175 organisations, including the likes of MSC and Hapag-Lloyd, onboard by 2020.
But despite having the might of Maersk behind it, the platform never reached its lofty ambitions, with the platform reportedly becoming a casualty of that wariness by parties around sharing confidential and business-critical data.
Maersk told ShippingWatch the failure was about an ‘unwillingness among central players to share the necessary data to make that type of industry standard (and business) live’.
The involvement of Maersk itself was also noted as a potential stumbling block. IBM”s Erdly noted in 2018 that having Maersk driving the project was ‘both a really good thing and a worrying thing, because they are such a big player in the industry’.
Certainly, there were rumblings from carriers, concerned the platform might not promote all carriers equally, and some saying in 2018 the platform was ‘unusable’.
Amir Billones, a data archietect and manager of the EDI/integrations team at Canadian terminal operator Termont Montréal, provided a ‘love/hate reivew’ of Tradelens last week, noting ‘not fast enough, not facilitated, not holistic enough’ on LinkedIn last week.
“Direct integration from ERP/TOS/FMS should have been the strategy. This would have been a rapid, low risk, standard way of assured compliance. Currently some would feed EDI to the Tradelens blockchain… which makes it even slower than the EDI norm. Investment should be in making it plug and play, normalised and standardised deployment,” he says.
He also questioned how many terminals would need to be on it to make it useful.
Some of Tradelens’ customers won’t be abandoning blockchain-based digital platforms, however. Hapag-Lloyd is just one company which apparently wasn’t prepared to make a bet on a single platform. It’s also on the Hong Kong-based Global Shipping Business Network – Tradelens’ key competitor.
New Zealand’s Tradewindow, which provides digital solutions for exporters, importers, freight forwarders and customs brokers, recently announced a trial agreement with GSBN for a proof of concept allowing international shipping and port data to be included in its Cube platform.
Lars Jensen, CEO and partner in Denmark’s Vespucci Maritime, a container shipping consultancy service, says TradeLens was ‘born out of the blockchain hype’ of five years ago, but says the failure isn’t an indication blockchain doesn’t have a place in shipping.
“It likely does for some uses,” he says on LinkedIn.
“However, it is an indication that it is commercial usage which determines the fate of new technological initiatives and not the sophistication of the technology employed.”
The TradeLens platform will go offline by the end of Q1 2023 and Maersk says steps will be taken to ensure customers do not experience disruption to their businesses during the process.
Hershko says Maersk will continue its efforts to digitise the supply chain, leveraging the work of TradeLens as a stepping stone.
