Blink and you may miss the announcement.
The world’s second-largest container shipping group AP Møller-Maersk said on Tuesday (with very little fanfare) that:
A.P. Moller – Maersk and IBM to discontinue TradeLens, a blockchain-enabled global trade platform
Starting today, the TradeLens team is taking action to withdraw the offerings and discontinue the platform, and the intent is that the platform will go offline by end of quarter one, 2023. During this process all parties involved will ensure that customers are attended to without disruptions to their businesses.
Maersk will continue its efforts to digitise the supply chain and increase industry innovation through other solutions to reduce trade friction and promote more global trade.
“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. We will leverage the work of TradeLens as a steppingstone to further push our digitisation agenda and look forward to harnessing the energy and ability of our technology talent in new ways,” said Rotem Hershko.
The TradeLens platform was announced in 2018 and jointly developed by IBM and GTD Solution, a division of Maersk, as a blockchain-enabled shipping solution designed to promote more efficient and secure global trade.
Compare and contrast the above with the much longer press release from the day the project was launched in August 2018 (it’s replicated below purely for illustrative purposes, and by all means do scroll quickly to the bottom. Hindsight hilarities have been emphasised in bold for my own amusement):
In a follow up to their January announcement, A.P. Moller -Maersk (MAERSKb.CO) and IBM (NYSE:IBM) today announced the creation ofTradeLens, jointly developed by the two companies to apply blockchain to the world’s global supply chain. TradeLens is the result of a collaboration agreement between Maersk and IBM, a blockchain-enabled shipping solution designed to promote more efficient and secure global trade, bringing together various parties to support information sharing and transparency, and spur industry-wide innovation.
As part of the TradeLens early adopter program, IBM and Maersk also announced that 94 organizations are actively involved or have agreed to participate on the TradeLens platform built on open standards. The TradeLens ecosystem currently includes:
More than 20 port and terminal operators across the globe, including PSA Singapore, International Container Terminal Services Inc, Patrick Terminals, Modern Terminals in Hong Kong, Port of Halifax, Port of Rotterdam, Port of Bilbao, PortConnect, PortBase, and terminal operators Holt Logistics at the Port of Philadelphia, join the global APM Terminals’ network in piloting the solution. This accounts for approximately 234 marine gateways worldwide that have or will be actively participating on TradeLens. Pacific International Lines (PIL) have joined Maersk Line and Hamburg Süd as global container carriers participating in the solution. Customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia and Peru are participating, along with customs brokers Ransa and Güler & Dinamik. Participation among beneficial cargo owners (BCOs) has grown to include Torre Blanca / Camposol and Umit Bisiklet.Freight forwarders, transportation and logistics companies including Agility, CEVA Logistics, DAMCO, Kotahi, PLH Trucking Company, Ancotrans and WorldWide Alliance are also currently participating.
TradeLens uses IBM Blockchain technology as the foundation for digital supply chains, empowering multiple trading partners to collaborate by establishing a single shared view of a transaction without compromising details, privacy or confidentiality. Shippers, shipping lines, freight forwarders, port and terminal operators, inland transportation and customs authorities can interact more efficiently through real-time access to shipping data ad shipping documents, including IoT and sensor data ranging from temperature control to container weight.
Using blockchain smart contracts, TradeLens enables digital collaboration across the multiple parties involved in international trade. The trade document module, released under a beta program and called ClearWay, enables importers/exporters, customs brokers, trusted third parties such as Customs, other government agencies, and NGOs to collaborate in cross-organizational business processes and information exchanges, all backed by a secure, non-repudiable audit trail.
During the 12-month trial, Maersk and IBM worked with dozens of ecosystem partners to identify opportunities to prevent delays caused by documentation errors, information delays, and other impediments. One example demonstrated how TradeLens can reduce the transit time of a shipment of packaging materials to a production line in the United States by 40 percent, avoiding thousands of dollars in cost. Through better visibility and more efficient means of communicating, some supply chain participants estimate they could reduce the steps taken to answer basic operational questions such as “where is my container” from 10 steps and five people to, with TradeLens, one step and one person.
More than 154 million shipping events have been captured on the platform, including data such as arrival times of vessels and container “gate-in”, and documents such as customs releases, commercial invoices and bills of lading. This data is growing at a rate of close to one million events per day. Traditionally, some of this data can be shared through the EDI systems commonly used in the supply chain industry but these systems are inflexible, complex, and can’t share data in real-time. Too often, companies must still share documents via email attachment, fax and courier. TradeLens can track critical data about every shipment in a supply chain, and offers an immutable record among all parties involved.
“TradeLens uses blockchain technology to create an industry standard for the secure digitization and transmission of supply chain documents around the world,” commented Peter Levesque, CEO of Modern Terminals. “This initiative will generate tremendous savings for our industry over time while enhancing global supply chain security. Modern Terminals is pleased to participate as a Network Member in testing this exciting shipping industry innovation.”
“As a global logistics provider, CEVA sees a unique opportunity in TradeLens, joining forces with IBM, Maersk and other actors from our industry to promote global standards around an open and neutral solution, delivering on the promise of blockchain. It is an important step in our relentless journey to deliver increased value to all our customers and making business flow,” said Christophe Cachat, CIO of CEVA Logistics.
“We believe blockchain can play an important role in digitizing global shipping, an area of the global economy that moves four trillion dollars of goods every year. However, success with the technology rests on a single factor -bringing the entire ecosystem together around a common approach that benefits all participants equally,” said Bridget van Kralingen, senior vice president, IBM Global Industries, Solutions and Blockchain. “Our work with Maersk and other enterprises in the shipping ecosystem has shown that blockchain can be used to form a strong, connected network in which all members gain by sharing important data and that together we can transform a vital part of how global trade is conducted.”
Joint collaboration model to maximize industry adoption. Since announcing the jointly developed solution to digitize global trade in January 2018, and based on feedback from various members of the global supply chain ecosystem who would like to adopt the technology, IBM and Maersk have modified the go to market model and will now deliver their solution through an extension of their pre-existing collaboration agreement instead of a joint venture.
“Our joint collaboration model allows us to better address key feedback from ecosystem participants while ensuring TradeLens interoperability and data protection among Maersk, IBM and all ecosystem participants,” said Mike White, TradeLens leader for Maersk. “We strongly believe this will maximize industry adoption.”
Standards discussions are actively underway with openshipping.org and work to align the TradeLens APIs with UN/CEFACT standards is in progress. The TradeLens APIs are open and available for developer access and feedback from participants in the platform.
The TradeLens solution is available today through the Early Adopter Program. TradeLens is expected to be fully commercially available by the end of this year.
For more information about TradeLens and what ecosystem participants are saying about this solution, please visit: http://www.tradelens.com
About Maersk A.P. Moller – Maersk is an integrated container logistics company working to connect and simplify its customers’ supply chains. As the global leader in shipping services, the company operates in 130 countries and employs roughly 76,000 people.For more information about Maersk, visithttps://maersk.com/or follow us on Twitter at @maersk.
About IBM IBM is the leader in open-source blockchain solutions built for the enterprise. As an early member of Hyperledger and active contributor to the Hyperledger Fabric and Stellar blockchain projects, IBM is dedicated to advance cross-industry blockchain technologies supporting the development of openly-governed transactional business networks. IBM has worked with more than 400 clients across financial services, supply chains, IoT, risk management, digital rights management and healthcare to implement blockchain applications. For more information about IBM Blockchain, visithttps://www.ibm.com/blockchain/.
Hindsight is definitely a wonderful thing. But it’s not like we didn’t tell you so.
It never ceases to amaze me how effective the strategy of sprinkling in meaningless bullshit jargon about blockchain was circa 2017-2018. The biggest red flag obviously came in the repeated presentation of unproven hypotheticals as realities that investors should simply take for granted. Eyebrows should also have been raised by the many parroted cliches straight out of blockchain promotional school 101, not overlooking the now infamous assertion that blockchain allows for “an immutable record among all parties involved”.
What investors, customer and backers should have been asking instead is: what the hell is “a blockchain-enabled shipping solution” anyway? And do we really need it? Does a blockchain really solve any of the issues my industry is facing (mainly shipping inspector corruption ahem)?
Did any of the people involved in the project know what they were talking about?
The timing is also curious.
As recently as November 2, Maersk was saying in its Q3 results that “TradeLens continues to expand its network and now consists of more than 455 network members.” Given it was a great quarter for the shipping giant by all measures, what prompted the sudden about turn on blockchain?
Could Maersk have been spooked by the ASX’s announcement that it was backing out of its Digital Asset blockchain project on November 17?
Possibly.
Since IBM has not yet announced the move on its own site, it’s fair to assume the dissolution was prompted by the Maersk side. That makes sense. Rumours abound that IBM will soon be scaling back its own blockchain department too. One informed source tells me IBM higher-ups have finally realised that what was supposed to be a major revenue generator for the company is turning out to be a major cost hole, with little perceived chance of a turnaround any time soon.
We ourselves will be keeping a keen eye on the following projects too (not least because they were pitched as follows when they came to market):
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March 28, 2017: Natixis, IBM and Trafigura introduce first-ever Blockchain solution for U.S. crude oil market
- November 6, 2018: DTCC Enters Test Phase on Distributed Ledger Project for Credit Derivatives with MarkitSERV & 15 Leading Global Banks
You don’t need a rocket scientist to figure out that the most challenging application of blockchain was always going to be the realms of trade finance, commodities and supply chain management. This is because blockchain’s digital composition is impossible to perfectly tie to tangible reality.
A blockchain system will always be predisposed to the so-called “garbage in, garbage out” problem, meaning supply chain integrity will only ever going to be as robust as the weakest human node in the chain. If those originating the tokens on the system can be bribed to allow substandard goods, commodities or ghost assets to enter the system, the presence of blockchain will do little to add integrity to the system. If anything, it is likely to create a false sense of security.
As an example, the UK’s serious fraud office announced in early November that it had fined commodity trading house Glencore $400mn after its investigation discovered that the company had paid out $29m in bribes to gain preferential access to oil in Africa. As the SFO’s findings noted (my emphasis):
Glencore pleaded guilty in June this year to seven counts of bribery, after an SFO investigation exposed that it had paid bribes to maximise its oil trading profits in five African countries.
The conviction includes the first ever use of substantive bribery offences for a company, meaning senior individuals at Glencore authorised the bribery instead of simply failing to prevent it.
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The SFO opened an investigation into Glencore in 2019, focussed on the activity of the London-based West Africa desk. This desk sourced and traded in crude oil from countries across Africa.
The investigation uncovered a trail of text messages, large cash withdrawals and deliberately concealed payments that showed Glencore paid bribes worth a total of $29m to secure its access to oil in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.
In Nigeria, Equatorial Guinea and the Ivory Coast, Glencore was revealed to have used well-connected local agents to funnel bribes into state-owned oil companies and government ministries, often disguising a bribe as an unspecified “service fee”, “signing bonus” or “success fee” in financial reports.
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Between 2012 and 2015, another Glencore trader withdrew a total of $8.2m in cash from the company’s Swiss cash desk, recorded as “office expenses”, despite there being limited evidence of any office operating in the country. This, along with $5.5m of “service fees” withdrawn in cash by a Nigerian agent, was periodically flown, again on private jets, to Cameroon. It was used to bribe officials in the country’s national oil and gas companies.
Would blockchain have prevented any of the above? Of course not. If the input agents are corruptible — and for as long as mass inequality and poverty prevail they will be — nothing but trust and active policing can secure such a system from pilfering, smuggling or worse.
A source with some familiarity of the inner workings of Belmarsh prison recently brought to my attention that even the highest-level security systems in Britain cannot defend themselves from illicit internal supply chains. There is as much illegal drug trade that goes on inside prison walls as it does outside.
Mass surveillance and itemised tracking of everything has done little to stop it. Why? Because the ultimate problem is and always will remain corruption. The more we work to create “controlled and cleared systems” — the more gatekeepers we need to introduce to maintain them. And with every gate and gatekeeper we add to guard the system, we create a new rent-extraction opportunity.
What blockchain idealists have to come to terms with if they’re really serious about adding efficiency and value to supply chains, trade and finance is the uncomfortable truth that sometimes the only way to fight fire is with fire (clip 1), and by getting your hands on the true dark ledger (clip 2):
