How Supply Chain Makes Use of TradeLens – Maersk and IBM Blockchain Solution
Blockchain has emerged as a go-to tool for all industries, with the supply chain being no exception. Back in 2018, Maersk joined forces with IBM to introduce TradeLens, a blockchain-based shipping solution that is already upending the world of supply chain and logistics. To date, the TradeLens project has attracted the attention of more than 170 companies globally and enabled them to streamline their workflows.
One can but marvel at how blockchain, the technology previously associated with cryptocurrency only, has managed to make a quick technological breakthrough and become a game-changer in such a serious and demanding area as shipping.
The shipping industry has long faced plenty of challenges. Quite a number of shipping and logistics companies are still reliant on inefficient, outdated systems in their processes and are forced to deal with enormous quantities of paperwork and bureaucracy. Besides, cross-border shipping normally involves manual transportation and verification of paper documents for every shipment. As a result, refrigerated goods that are carried from East Africa to Europe, for instance, will have to pass through the hands of approximately 30 people or organizations, requiring about 200 communications, before they finally arrive at their destination. These processes are time-consuming and error-prone. The results can be lost documentation and/or delays in delivery.
Considering the issues outlined above, Maersk, one of the largest container operators in the world, teamed up with IBM to introduce an advanced, multifunctional blockchain-based platform called TradeLens that guarantees to provide unparalleled transparency, cooperation, and efficiency in global supply chains.
Read on to find out about what lies behind the IBM and Maersk blockchain collaboration, how it benefits the supply chain industry, what goals TradeLens pursues, and what prospects it has.
Overview of the Maersk and IBM partnership
Founded in 1904, A.P. Moeller-Maersk is one of the largest shipowners and container operators, transporting around 12 million containers annually. The company provides services in ocean and inland freight transportation as well as supply chain management and port operation. Headquartered in Denmark, Maersk also has offices in 130 countries and a global workforce of over 80,000.
Maersk works with both large and small enterprises, regardless of their industry and cargo characteristics. It transports goods on all possible trade routes and takes responsibility for organizing the entire shipping process. The company always keeps abreast of the latest technology trends and implements the most innovative solutions in its processes in order to enhance customer satisfaction and automate mundane manual operations.
Weighing up the numerous possibilities and benefits of blockchain, Maersk decided to press ahead with the technology. The company initially planned to implement blockchain to track cargo movements and automate paperwork for shipping across international borders. For this, Maersk partnered with the International Business Machines Corporation (IBM), which helps organizations adopt blockchain technology in their processes. IBM is known to be keen on the mass-scale implementation of blockchain – it has put great effort into blockchain’s development.
The Maersk-IBM partnership created the multifunctional, comprehensive blockchain-enabled shipping solution TradeLens, which is already displaying its capacity to enhance the global supply chain.
What is TradeLens and why is it so popular?
Created by Maersk and IBM, TradeLens is an open supply chain platform supported by blockchain. It aims to:
- enable the convenient and secure sharing of information
- allow for greater collaboration across supply chains
- promote more transparent and efficient global trade
Thanks to the elaborate IBM blockchain technology, TradeLens provides a single shared view of transactions without affecting privacy and confidentiality. As Maersk and IBM state, shippers, freight forwarders, port and terminal operators, customs authorities, and other participants in supply chains will be able to easily and efficiently interact with one another. In addition, they will all have access to the relevant shipping data and documents, alongside IoT and sensor data that help detect temperature, container weight, and so on.
Companies and organizations from many parts of the world are engaged in the project and extremely enthusiastic about the concept behind it. Among the participants are the largest port and terminal operators, including PSA International (Singapore), International Container Terminal Services Inc (the Philippines), Patrick Terminals (Australia), Modern Terminals (Hong Kong), Port of Halifax (Canada), Port of Rotterdam (the Netherlands), Port of Bilbao (the Basque Country, Spain), PortConnect (New Zealand), PortBase (the Netherlands), terminal operators Holt Logistics at the Port of Philadelphia (the USA), and the global APM Terminals’ network.
The idea of modernized and automated record-keeping and information exchange, as well as simplified communication and interaction between the participants, appeals to a wide spectrum of companies. As a result, the TradeLens consortium has so much potential to attract even more members to the project.
How it all started
In January 2018, at the THINK’18 event in San Francisco, IBM and Maersk announced that they were going to come together to create a digital, blockchain-enabled platform specifically for the shipping industry.
It’s worth mentioning that before introducing TradeLens to the world, Maersk and IBM worked with a number of ecosystem partners: this helped them detect opportunities to avoid delays caused by documentation errors.
Six months later, TradeLens was officially announced to the world, and almost simultaneously, the TradeLens beta product and early adopter program were launched. ClearWay, the trade document module that was introduced under the beta program, enabled importers, exporters, and customs brokers as well as government agencies and NGOs to take part in data sharing and various business processes, which are all supported by a secure audit trail.
In June 2019, the IBM and Maersk blockchain initiative managed to attract four out of the world’s six largest ocean carriers. As of December 2019, the TradeLens platform could already boast of publishing more than two million events daily and having more than 175 unique organizations in its team.
What are the key project goals?
Being an innovative project that focuses on open standards and governance, TradeLens is perfectly capable of benefiting the entire supply chain industry. To be more specific, let’s identify the key TradeLens goals and find out what the project is trying to achieve or improve.
The creation of a single ecosystem
TradeLens aims to pull together all parties participating in the supply chain, including cargo owners, freight forwarding companies, domestic transport (rail and road), sea carriers, ports, terminals, customs, and other government agencies. These parties manage to connect and interact in one common neutral network, where all the processes are automated and standardized.
The introduction of secure information exchange
TradeLens offers secure, convenient, and swift information exchange among all network participants. The types of data normally shared between users are transport, location and cargo details, sales documents, sensor readings, and so on. In addition, TradeLens participants are able to track the status of their cargo and all the documentation related to it.
The level of transparency provided by the TradeLens project helps eliminate fraud and errors, cut the time that goods spend in the transit and shipping processes, enhance inventory management, and even mitigate the vast expenses.
TradeLens has paved the way for innovation and improvement via an open API environment, as well as standardization and the support of interaction between the participants. The platform also offers a sandbox and a special marketplace where third parties can easily create and launch new apps.
Take a look at how this solution has automated and consolidated interactions within the supply chain
How does TradeLens function?
Even though the TradeLens platform handles complicated processes, its functioning principles are quite easy to grasp. Below, we outline how this Maersk and IBM blockchain supply chain solution works.
- 1. First, sensors are attached to the cargo, transport, and even port equipment.
Sensors are needed to track the location and other data, e.g. temperature, shaking, and humidity. The information that comes from these sensors is then recorded on the blockchain and can be viewed by all participants. This proves very useful when you wish to find out about the cargo condition.
- 2. Meanwhile, those sensors are also able to convey information to each other.
For instance, once a container’s sensor is on a cargo ship, it transmits the data about its condition and location to the cargo ship’s sensor. Then, when the ship arrives at the destination, its sensor shares the data about both the vessel and the cargo that it is carrying.
- 3. The data received from the sensors allow users to automatically fill in documents related to the containers and cargo, such as financial calculations, payment of customs duties, audits, and more.
The automatic interactions that lie at the core of TradeLens allow you to bolster and simplify workflows and make various calculations faster.
As for the role of Maersk blockchain in the processes, it’s responsible for keeping, exchanging, and protecting all information. It also ensures that the data entered into the system is completely genuine and is free of any errors and inaccuracies.
What does TradeLens consist of?
TradeLens consists of certain components that create a solid, reliable, and convenient-to-use platform. But what are they, and what function does each of them perform? Let’s take a look.
The TradeLens project relies heavily on its elaborate business network that comprises shippers, consignees, freight forwarders, carriers, ports, customs brokers, and many other related parties. Each organization is obliged to provide information to the ecosystem, which will then be stored, processed, and tracked on the platform. The ecosystem itself can be divided into three levels:
- Advisory board is a management authority responsible for creating an ecosystem development strategy. Large companies, as well as representatives of international organizations and government agencies engaged in cargo transportation, can become council members of the Board.
- Validators are network members who are accountable for verifying and authenticating transactions. To be given the status of a validator, you have to be a “big player” in the shipping industry.
- Participants are normally made up of different companies, ports, non-profit, and other organizations.
At the TradeLens marketplace, third parties can easily develop and deploy different applications and smart contracts. The marketplace also allows all members to carry out testing in the sandbox – a special virtual environment.
The platform itself is a software product predicated on Hyperledger Fabric and IBM Cloud blockchain technology. It enables you to keep and exchange data and other values. The exchange is conducted via smart contracts.
Read this article to find out more about Hyperledger and its applications
What are the benefits of TradeLens?
TradeLens offers significant benefits to the supply chain ecosystem. The IBM and Maersk blockchain solution sets up a unified, immutable, real-time, detailed view of all transactions.
All the participants in the supply chain have the opportunity to get the most relevant information and updates about the cargo. Being aware of the state of the goods allows manufacturers, wholesalers, and retailers to be better informed about slowdowns and other problems related to the cargo.
Security and efficiency
Even though blockchain has become a panacea for a wide array of problems, by itself it will not be able to tackle all the challenges facing the supply chain and logistics industry. However, it has much to contribute in terms of more efficient risk management, safe and secure transactions, and fraud elimination. Furthermore, blockchain can tackle issues connected with counterfeiting and theft.
Better financial liquidity
Blockchain also has the potential to enhance financial liquidity for financial institutions that are responsible for trade financing in the supply chain industry. Banks that provide digital trade finance products will gain improved visibility of the main events impacting their transaction-related financing and digital documentation. This will lead to faster payment processing and a reduction in the time needed for “trapped liquidity” at banks.
More opportunities for international trade
It was stated at the World Economic Forum (WEF) that the elimination of barriers to the information exchange within the international supply chain will help global trade grow, create more jobs and lift economic growth as a whole. For its part, TradeLens can help improve international trade and make it stronger.
One more advantage that blockchain-powered TradeLens offers is considerable savings. Given that the platform allows businesses to cut costs on document management and cargo tracking, TradeLens could potentially save the global shipping industry billions of dollars annually. This is one of the greatest boons of the TradeLens consortium. When more companies decide to take part in the project, they too will reap the rewards.
Discover how this blockchain solution has provided integrity for the automotive supply chain
What does the success of TradeLens depend on?
TradeLens has already managed to attract on board a lot of world-renowned industry giants as well as smaller companies. It would be fair to say that most organizations are drawn by the blockchain that lies at the core of the project and its ability to bring about greater security and transparency.
Blockchain itself has gained plenty of attention. Companies all over the world, regardless of their industry specifics, have been thinking about implementing advanced technology in their processes. This is why Maersk, together with IBM, helps companies to make the best use of the advantages of DLT in conducting global trade. The partners are promoting their blockchain-based electronic shipping and supply chain solution and welcoming all those who wish to participate.
The success of TradeLens very much depends on how many functions it can perform. At present, it is capable of dealing with several aspects of the global supply chain system and has the potential to make global trade more efficient, secure, and transparent. Assuming that TradeLens keeps developing further, it’s safe to say that it will remain as popular as it is now, and will probably gain an even greater following.
Which companies have joined TradeLens and how do they use it?
A great number of shipping companies and organizations have been impressed by the platform’s capabilities and are wasting no time in exploring them.
- Agility Logistic, a freight forwarding and logistics company, has decided to use TradeLens to provide its customers with better services, including customs clearance brokerage.
- The global terminal operators APM Terminals and PSA International are also eager to exploit the TradeLens platform to contribute to efficient port collaboration and better terminal planning.
- Mediterranean Shipping Company (MSC) and CMA CGM, one of the biggest container shipping groups in the world, have joined the initiative to eradicate an expensive paper trail.
- DP World, a Dubai-based terminal operator, intends to connect its marine and inland container terminals, and even feeder companies and logistics divisions, with the help of TradeLens.
These are just a few examples of how different companies use the Maersk-IBM blockchain solution. The number of participants is growing: as more organizations decide to join TradeLens, global trade will become more convenient and efficient.
TradeLens vs other projects
Even though TradeLens has proved to be popular, it nevertheless has some rivals on the market and is facing competition from some other consortia, technology providers, and even startups. All of these are aimed at enhancing supply chains and helping shipping and logistics companies to do away with routine processes and add value to core operations. These companies provide keen and tough competition for the IBM and Maersk blockchain initiative: as a result, it is not easy for companies to make the right decision as to which or whose solution to choose.
Global Shipping Business Network (GSBN)
The Global Shipping Business Network (GSBN) is a relatively new consortium that was established by a global shipment management software solutions provider CargoSmart together with world-renowned ocean carriers such as CMA CGM (France), Cosco (China), Evergreen Marine (Taiwan), and OOCL (Hong Kong), as well as Hutchison Ports and Shanghai International Port.
The Global Shipping Business Network provides shippers with an opportunity to digitize and automate documentation. It also has solutions for dealing with “dangerous goods” – a type of goods that are classified as hazardous and are subject to a number of regulations. Another goal of the GSBN is to ensure smooth and seamless sharing and exchange of documents and other information at all stages of the shipping process.
Oracle Supply Chain Management (Oracle SCM)
Oracle Supply Chain Management (Oracle SCM) provides a set of applications with open and extremely flexible architectures as well as powerful capabilities and functional coverage. It also features integrated and modular deployment options.
As far as transportation and logistics are concerned, it’s worth noting that Oracle offers a range of warehouse, transportation, and global trade management solutions, such as transportation planning, transportation execution, fleet management, logistics, and network modeling.
Given that the Oracle Supply Chain Management is open, integrated, and complete, it can help to transform various shipping operations and streamline even the most demanding and complicated supply chain processes.
Slovenian startup CargoX has emerged with its blockchain-based bill of lading platform. This solution enables users to issue and transfer electronic bills of lading on a public blockchain network. According to CargoX, its solution will be suitable for freight forwarding companies and Non-Vessel Operating Common Carriers (NVOCCs).
It’s evident that blockchain has carved a niche for itself in the supply chain industry and is making logistics more transparent, efficient, and secure.
TradeLens by Maersk and IBM is just one of numerous examples of how blockchain can bring together various parties, contribute to advanced document management and information sharing, foster industry-wide innovation, and – most importantly – upgrade the entire system of global trade.
At PixelPlex, our professional blockchain development team can confidently deliver comprehensive blockchain solutions guaranteed to make the supply chain industry better integrated and more effective. Don’t hesitate to reach out to us – we’re always here to help.