Touted as a game changer in the logistics sector, blockchain has yet to record widespread adoption in this $10 trillion industry. The technology was dealt a big blow when Danish shipping giant Maersk (NASDAQ: AMKAF) and IBM (NASDAQ: IBM) announced the termination of TradeLens, a blockchain-powered supply chain platform. One report reveals that this has left China and Hong Kong at the forefront of blockchain logistics.
TradeLens failed to achieve “full global industry collaboration,” Maersk stated as it announced the termination of the platform in November 2022. Despite being backed by the world’s second-largest shipping company and a global tech behemoth, it failed to achieve the level of commercial viability necessary to continue operations.
With the demise of TradeLens, Hong Kong-based Global Shipping Business Network (GSBN) is now the world’s largest blockchain logistics platform.
GSBN brings together eight members, each granted equal voting rights. They include shipping companies Hapag-Lloyd (NASDAQ: HLAGF) and Cosco (NASDAQ: CHDGF), as well as shipping operators such as PSA International and Shanghai International Port Group.
While GSBN may not have the financial muscle of Maersk or the tech expertise of IBM, CEO Bertrand Chen believes it stands a better chance than TradeLens.
Speaking to the South China Morning Post, Chen revealed that a key reason for the downfall of TradeLens was that most partners viewed it as a product owned by Maersk, their biggest market rival. These partners were concerned that data shared or stored through TradeLens would be accessed by Maersk, giving the Danish giant an unfair advantage.
“The fact that TradeLens was seeded by Maersk, from a business perspective, was an impediment to growth. Because some of the customers that they need to court say, ‘I don’t trust Maersk.’”
Blockchain’s value proposition in the shipping and supply chain industry is clear. The sector still relies on outdated, mostly paper-based methods that are inefficient, slow, and costly. Digitizing the industry could free up trillions of dollars.
However, for blockchain to gather momentum, it needs the network effect, Chen added. A blockchain platform created and used by one company—much like TradeLens—is doomed to fail, he noted.
Goh Puay Guan, an associate professor of supply chain at the National University of Singapore Business School, concurs.
“Of course, the challenge is getting all companies on board because only when you have an integrated platform, then companies actually benefit from that integration,” he told the Post.
Chen knows all too well that getting several players aboard GSBN—especially beyond Hong Kong and China—is critical if the platform is to avoid the same fate as TradeLens. For now, only Singapore-based PSA International and Germany’s Hapag-Lloyd are not based in Hong Kong or China in the GSBN network.
Chen has global ambitions. He told the outlet that GSBN targets European shipping firms and even hopes to bring Maersk in the future, a task he admits “may be slightly challenging.”
For now, China will hold onto its lead. The country, for the first time ever, applied blockchain to the entire process of cross-border shipping from Sichuan province to neighboring Laos last December.
Meanwhile, supply chain management on the Bitcoin blockchain has taken great leaps in recent years. Norwegian startup UNISOT has been setting the pace and recently partnered with nChain to scale its blockchain services.
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