When the automobile industry launched at the beginning of the last century, there were hundreds of automakers trying to carve out their niche in the market. “Now we’re down to a few,” says Scott Collinson. And blockchain service providers targeting the global shipping industry find themselves in the same position as the auto sector 100 years ago, according to PwC Canada’s national transportation and logistics leader.
“The problem now becomes standardization,” says Collinson.
While some may blanch at the technology’s association with volatile cryptocurrencies, blockchain itself is considered sound.
The technology acts as an expanding list of records – or blocks – that are linked through cryptography, essentially serving as a secure electronic ledger that cannot be manipulated by a third party.
Applied to the container shipping industry, blockchain technology could eliminate millions of pages of paper documents, track containers more efficiently and reduce related costs.
Blockchain in Logistics, a 2018 report from the research arm of global logistics company DHL, estimates the technology could result in “billions of dollars in savings” by reducing delays and fraud through more efficient tracking of tens of millions of shipping containers annually.
In early 2018 IBM Corp. and shipping giant A.P. Moller–Maersk Group (Maersk) unveiled their TradeLens joint venture, which uses blockchain technology to push for more efficient information sharing among industry players.
By August the joint venture’s early-adopter program had attracted 94 organizations including ports, terminal operators and carriers.
And in Canada, the Port of Montreal and the Canada Border Services Agency (CBSA) had joined by the fall.
“Other carriers, they’re reluctant to come on board because they’re worried about trust and proprietary information,” Collinson says.
Last summer Maersk and IBM moved away from describing TradeLens as a joint venture and announced they’d deliver TradeLens through an extension of their pre-existing collaboration agreement.
“Competitors [perceiving] that a system was built by the biggest shipping company [Maersk] … will give Maersk a competitive advantage,” says Glenn Gow, who oversees all blockchain investment opportunities at Silicon Valley technology venture capital firm Clear Ventures.
“Whether or not this is true, the fact that the next three to four largest shipping companies didn’t participate in the build-out of the system means they’re going to do what they can to kill it.”
Maersk did not respond to an interview request from Gateway.
Locally, TradeLens does not appear to be gaining traction.
The Vancouver Fraser Port Authority is launching what it calls a “test project” in partnership with the CBSA that will use blockchain technology to share data securely and help improve efficiency when moving containers flagged for inspection.
The test project launches in early 2019 at the Tsawwassen Container Examination Facility in Delta, B.C.
Robert Coard, PwC Canada’s western technology and consumer markets leader, says that beyond the privacy concerns, many companies are reluctant to start using a specific blockchain tool before a dominant provider emerges.
“Early stages of the technology has really caused them to say, ‘We’re not sure yet,’” he says. “And so [companies are] kind of sitting on the sidelines saying, ‘OK, let’s see what comes.’”
Companies could find themselves making the same mistake as 1980s consumers who invested heavily in Betamax-format video libraries just as VHS was making its ascent.
Meanwhile, Collinson says, a new consortium of nine carriers and terminal operators could persuade more organizations to push forward with a global standard for blockchain within the shipping industry.
The Global Shipping Business Network, which was unveiled in November at the China International Import Expo in Shanghai, is developing a blockchain-enabled platform to track goods digitally.
“That might provide a bit more of an arm’s-length trust factor that allows others to maybe buy into that,” Collinson says.
“The value proposition is there. It’s just to what degree can the industry parties agree on standards that make multiple solutions interoperable?”
But the question about interoperability might be further complicated by differences in the way companies interpret blockchain, according to a 2017 research paper from Copenhagen Business School.
“Our findings suggest that the conceptual understanding of blockchain is low and there is no single agreed upon definition,” write report authors Riccardo Di Gregorio and Stian Skjærset Nustad. “Instead, various organizations have their own understanding of what blockchain is, leading them to develop their own blockchain solution.”
The authors add that this lack of uniformity results in even more non-interoperable systems and contributes to the creation of more data silos.
“This industry is obviously very fragmented still,” Collinson says. “It’s largely dominated by manual, paper-based and disparate processes. And so it is ripe for this standardization … that blockchain could provide.”
