Unpacking The Business Value Of Blockchain
Pioneering CIOs in the global shipping sector see blockchain tackling tough problems. But they’ll have to show COOs and CFOs what’s in it for them.
Readers of ETHNews know that opportunities abound in the application of blockchain technology to unbending problems. Leading universities are racing to bulk up on relevant course offerings. Blockchain conferences are taking over convention centers worldwide. Business consulting firms, from Boston Consulting Group and ATKearney to Accenture and Deloitte, are cranking out white papers faster than you can say “thought leader.”
The financial services sector was the first to step up – cryptoasset tracking and trading were natural spots to jump in. Before long, industries such as healthcare, aircraft repair and maintenance, trade finance and logistics, and agriculture started looking for ways to make bold improvements with blockchain’s help. The evangelism made sense to large organizations and value chains with sprawling data processing regimes.
ETHNews recently reported on TradeLens, a blockchain-enabled shipping consortium and network developed by IBM and Maersk. Here we check the progress to date.
The project involves the digitization and sharing of information for the transport of physical assets via commercial shipping. Imagine the need for unassailable documentation in end-to-end management of a complex, multinational supply chain. Delayed containers, tangled ports, trouble clearing customs, and subcontractor snafus can mean persistent late fees, extra carrier payments, and customer dissatisfaction. IBM and Maersk, a long-time IBM client, invited a wide range of players in the supply chain space to join the collaboration and drive efficiency for the benefit of all.
ETHNews spoke with Todd Scott, VP of global trade at IBM Blockchain, who reports strong progress since the program got underway last year. “The initial goal was at least 28 participants, including shipping companies, port and terminal operators, inland transportation and customs authorities, and freight forwarders. The membership roster reached 50 more quickly than expected.” The platform went to so-called ‘general availability,’ out of pilot stage, in December.
Members are also particularly interested in the platform’s document store, with 18 documents available. “Three of these are already structured documents: a packing list, seaway bill, and commercial invoice,” said Scott. “The structure of these documents is based on standards set by the market.” The other 15 are, so far, unstructured. “Once the standards are established and are approved, we will move those into a structured format as well.”
That’s important because a company may have spent a great deal of effort to create, for example, an e-invoice format that nicely serves the data management needs of several top-tier customers. CFOs will need air-tight justifications for further spending. They’ll ask for cost projections and timetables, new talent needs, audit trails, and reasonable forecasts for return on working capital. CEOs will ask about competitive advantage, enterprise risk, and alignment with business growth plans.
Scott says that may well be the case at times, but “there are others asking us questions like ‘when will your electronic bill of lading be ready?'” That work is slated for the coming months. The organizations joining TradeLens believe that, beyond offering the three structured documents, it’s sensible to support the use of unstructured documents “because that’s where the uptake stands today. If you have four or five organizations in your trade network, there could be hundreds of pieces of paper associated with shipments.” Trying to move all that to a structured document format could be ill-advised in some cases.
Asked whether there’s much internal systems work needed to join TradeLens, Scott said, “We have dedicated onboarding teams available globally to get new clients set up.” What about time-to-onboard? “We have seen some port operators and terminals take as little as four days to move onto the platform. Sure, among big shipping lines, that time varies.” He rightfully won’t make universal claims in this regard. Still, the most important issue among prospective TradeLens consortium members remains reliable visibility on shipments.
A Final Word
In the past, lots of large organizations didn’t want to be pioneers with new information management technologies. They were happy to let the early adopters make mistakes, then step in to scoop up the lessons learned. But blockchain evangelists such as Don Tapscott, co-author of Blockchain Revolution and co-founder of the Blockchain Research Institute, urge industry leaders to take a different approach. “If you’re a CEO, you also need to get pilot projects going. Most of the big banks are doing this, but this is true in every industry. You also need to get yourself informed. There are all kinds of ways to plug in.”
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