Business realities give Maersk-IBM blockchain a chilly reception

Posted: 30 October 2018 7:26 pm
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Turns out most businesses don't want to collaborate with the competition as an unequal partner.

The Maersk-IBM TradeLens joint blockchain venture talked a justifiably big game. By the numbers, a blockchain or blockchain-inspired system could introduce huge efficiencies to the global supply chain.

However, it's only at its best if everyone, or at least a critical mass of shipping companies, get on board and agree to use the same system. Ten months later, that's where it's going wrong, CoinDesk says, with only one other carrier joining the fold – Pacific International Lines, the seventeenth largest carrier in the world by cargo volume.

Unequal partners

Maersk is the world's number one shipping line by volume, but if its competitors don't want to join up, it's not going to work.

"I won't mince words here – we do need to get the other carriers on the platform. Without that network, we don't have a product. That is the reality of the situation," said IBM TradeLens head Marvin Erdly to CoinDesk.

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Overtures have so far been largely unsuccessful, and other large Maersk competitors have reportedly already dismissed the project as unworkable, so it might not be looking too hot for TradeLens.

Maersk TradeLens head, Michael White, is more optimistic, pointing at the 100+ other partners it has brought onboard.

Todd Scott, VP of Global Trade - Blockchain at IBM, also notes that the nature of the platform means the value will keep growing over time as the ecosystem grows.

"Over 100 members have engaged with TradeLens, including two of the world’s top 10 ocean carriers, dozens of worldwide ports and terminals, which have logged more than 220 million shipping events and counting," he said. "Is there value in more joining? Absolutely. The nature of the platform and its governance model - which maximizes business value and protects company data - is built so that as the ecosystem grows, the enhanced value proposition of TradeLens will grow with it."

The TradeLens blockchain was envisioned as being semi-decentralised around a field of competitors, with each Maersk rival operating as a "trust anchor" on the IBM-developed blockchain, and that part might be quite agreeable.

The main problem might be that Maersk and IBM essentially own the TradeLens blockchain. The nodes might be semi-decentralised, but the intellectual property is still firmly in the hands of Maersk and IBM.

Erdly says there have been efforts to work around this and cast it as a more equal joint venture, but Maersk might be the elephant in the room.

"Obviously the fact that Maersk is driving this is both a really good thing and a worrying thing because they are such a big player in the industry. As you can imagine, that's going to be a factor," he said.

Lars Jensen, CEO of SeaIntelligence Consulting, a shipping analyst firm, told CoinDesk that Maersk and IBM's complete ownership of the intellectual property was the deal breaker that immediately turned curiosity into a hard no.

Open up

It's perhaps not an unexpected problem to encounter in private, closed blockchain systems. Other areas are seeing productive discussions with entities such as the Blockchain in Transport Alliance, which aims to bring competitors together for collaboration, but it might not be useable everywhere.

It probably doesn't help that there are other options available, such as an Accenture shipping blockchain solution, which is promising similar results without the inequality. Maersk can't have a blockchain party by itself, and if its competitors aren't going to be equal partners, they can simply go elsewhere collectively.

It's a problem that most fully public blockchains won't experience since all participants are equally powerless. But that powerlessness might not be particularly palatable either.

It might be especially relevant to the shipping industry, supply chain systems and anything else that brings a stack of disparate partners together, but there might be a lot of different ways of finding a balance. The introduction of token incentives in particular might create some interesting ways of spurring collaboration, while decentralised autonomous organisation governance – and the possibility of creating consortiums within broader blockchain environments – might prove especially powerful once more competitors need to find their middle ground.

Succeed or fail, everything at this early stage of the technology is going to be a learning experience.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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