As discussed on pages 453 and 586 of the text, blockchains have huge potential to add efficiency and security to operations. Two major European ship operators have just joined a blockchain platform formed by Maersk and IBM, in a significant boost for the adoption of the technology across the logistics industry, reports The Wall Street Journal (May 28, 2019).
The addition of France’s CMA CGM and Swiss’s Mediterranean Shipping to the effort called TradeLens means the 3 carriers that control 1/2 of all seaborne containerized cargo capacity will make the movement of freight in international supply chains more transparent and potentially generate substantial annual savings.
Maersk and IBM in 2016 kicked off the blockchain platform for container ships, which carry the vast majority of consumer goods, furniture, manufacturing parts and other basics of global commerce. Large companies such as Walmart, P&G and DuPont, along with 100 ports, have been testing the technology to get a better view of their supply chains, from raw materials to finished goods.
For ocean carriers, the blockchain technology allows trusted participants to share information as goods move through supply chains. The system also promises to reduce the cost of paperwork. Maersk said the cost of the required documentation to process and administer many of the goods shipped each year makes up 1/5 of the actual physical transportation costs.
The French carrier’s decision to join TradeLens is “a signal that the whole notion of blockchain tourism is over and that we are at a tipping point for scale where participants will share data in a trusted fashion,” said an IBM exec.
Classroom discussion questions:
- Explain how blockchain works.
- What impact is blockchain intended to have on this industry?