Members of the Ocean Alliance, Tang Ming Lines, and CargoSmart are teaming-up to form a consortium to develop, implement and pilot blockchain technology enabled processes to address specific stakeholder network needs.  Global Trade

The Ocean Alliance includes global shipping carriers CMA CGM, Costco Group, Evergreen Marine, Orient Overseas Container Line (OOCL). Joining this effort is carrier Yang Ming, which is a member of The Alliance carrier network. These five involved carriers, along with global port operators DP World, Hutchison Ports, PSA International and Shanghai International Port Group will participate in what is being termed as the Global Shipping Business Network (GSBN), which will be enabled by leveraged use of both blockchain and other analytics-based technologies.

Hong Kong and San Jose California based CargoSmart will provide the blockchain software configuration and development to connect all the various stakeholders in the overall global shipping process, utilizing the newly released Oracle Blockchain Applications Cloud suite. Oracle just announced  specific use-specific applications focused on enhanced traceability and supply chain transparency for this platform.

This announcement follows the recent launch of the Trade Lens platform, to be jointly sponsored and developed by shipping industry leader AP-Moeller-Maersk and IBM.

 

Technology Significance

We called Supply Chain Matters reader attention to CargoSmart’s intent to launch GSBN in our recent coverage of the Oracle OpenWorld 2018 conference.  In a dispatch commentary, we highlighted interviews with both Oracle’s Senior Director for Internet of Things (IoT) and Blockchain technology, and CargoSmart’s Chief Operations Officer.

Our conversations reinforced that IoT and Blockchain are not solely an end state. They represent new advanced technology enablers for solving specific or complex business process challenges in the context of B2B stakeholders. In the case of the GSBM, the network pilot will initially be in automating the transaction and document processes focused specifically on hazardous materials container movements that in end-to-end movement have  significant safety and liability concerns for the many participants in the overall movement.

Anyone directly involved in global trade understands complexity managed by systems that were developed decades ago. Latency of shipment information is a gnawing problem, and information directly related to hazardous cargo could take upwards of a week to fully process.  That is critical information that is laggard to operational and decision-making needs as well as any accident that might occur at a point in the overall journey. CargoSmart is addressing deployment of blockchain to control shipment information that is a relatively smaller portion of overall global shipment data yet has significant operational and monetary consequences for shipping carriers, port operators, insurance companies and other shipping services participants.

The first prototype will be available next month, allowing shippers to digitize shipping transactions and declarations.  Process support will be expanded to other commodity and component shipments over time.

Industry Significance

The Ocean Alliance is one of three major global shipping line alliances focused ocean container shipping that were designed to pool various alliance firm vessels with major shipping routes to increase efficiencies and asset utilization. Movement and routing of containers between global trade routes involves utilization of any one of the alliance’s shipping line vessels. Thus, all processes related to tendering and movement have to be somewhat standardized in terms of transactional documentation and information dissemination. This has been an ongoing challenge since the formation of such alliances.

The industry’s larger 2M alliance includes carriers Maersk Lines, Mediterranean Shipping Lines (MSC) and Hamburg SuD, now and operating division of Maersk.

Shipping industry leader Maersk, in partnership with IBM, launched TradeLens, also a blockchain technology focused joint venture, focused on increased security, transparency, and trade finance efficiencies. TradeLens leverages IBM’s Blockchain technology platform.

Since its introduction in the summer of 2018, Maersk and IBM worked with a multitude of potential partners to identify opportunities to provide added efficiencies utilizing smart contracts and distributed ledgers to prevent delays, document errors or address other stakeholder challenges. One report we viewed indicated upwards of 154 million shipping events had been captured on the platform with data volumes growing at one million events per day. That implied a transactional scalability challenge as well as a managing scope challenge,

Feedback from potential interested stakeholders caused a modification of the go-to-market strategy, changing from the original corporate joint-venture to a technology collaboration among Maersk and IBM.

Reports point to upwards of 20 global port and terminal operators have signed on TradeLens including Maersk’s owned APM Terminals and DAMCO logistics business units. However, broader shipping line participation has been limited to just Pacific International Lines (PIL) and Hamburg SUD, principally from concerns raised by carriers relative to a perceived lack of or conflicting sets of stakeholder value.

With this week’s announcement of GSBN, shipping industry participants and stakeholders thus have at least two industry options related to the evolving business value-propositions related to blockchain enabled processes.

Once again, IoT and Blockchain technology are not and should not be viewed solely as an end state. They are new advanced technology enablers for solving jointly recognized business process challenges in the context of B2B stakeholders. In supply network processes as in all supply chain management focused processes, the end-goal is meeting customer and associated process stakeholders’ value-needs, while at the same time balancing the sponsoring organization’s business outcome needs.

In the case of GSBN and CargoSmart, the initial scope will be the global-wide movement and control of hazardous ocean container cargo. While a far smaller representation of overall global shipping volumes, the safety, liability and insurance considerations have significant monetary considerations for most stakeholders. We believe that represents a well-defined and managed scope of implementation that meets such criteria.

Both global shipping blockchain focused platforms bear watching over the coming months.

 

Bob Ferrari

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