Introduction
Unknowingly, the blockchain has been developed for nearly 10 years, but even now there are still people who question the current application of the blockchain, but on the contrary, with the accumulation of technology and industry exploration in the past few years, the blockchain Has quietly taken root in some industries…
The “Blockchain Application Cases” column is intended to explore the true implementation of the blockchain through some specific cases of the combination of blockchain and the physical industry, and to inspire enterprises or blockchain practitioners.
As the leader of global shipping companies, Maersk Group also suffered an unprecedented crisis in 2015, but this giant company decisively chose to “break the boat” reform and climbed out of the trough in just 4 years. Tradelens, a well-known shipping platform built on blockchain technology, has become the world’s largest shipping blockchain platform. So how did they use blockchain technology to create this miracle, and how did they bottom out and rebound? In this article, I will disassemble it in detail for you, the following Enjoy.
background
1. Basic situation of shipping industry
The new crown is not over, global trade disputes are becoming more and more serious. In the short term, the global economy has not seen the time point for the concentration of risks to be lifted. It remains to be seen whether the recession will continue in the medium and long term. Look, the main determinant of the supply-side return is the achievement of the outcome of the Sino-US peace talks; and what we know is that no matter what the outcome of the US general election, the trade frictions between China and the US will exist for a long time. Therefore, shipping is the main factor in international trade. One of the carriers, the outlook is expected to be difficult to be optimistic in the short term.
The shipping industry is closely related to the macroeconomic situation, showing a very strong cycle. The cyclicality of the shipping industry can be roughly divided into four stages:
In the first stage, the economic situation recovered and the demand for transportation capacity increased. However, the supply of transportation capacity in the industry was still at a low level at this time, and the supply exceeded demand in a short period of time. The freight rate rose rapidly, and the new shipbuilding orders in the industry increased sharply.
In the second phase, as the demand for capacity reached its peak, the growth rate began to decline. At this time, due to the long ship construction cycle, new orders concluded in the first phase began to be delivered, and the industry’s capacity began to increase rapidly.
In the third stage, due to the large increase in capacity in the previous period, the supply in the industry exceeded demand, resulting in oversupply of capacity, and freight rates began to decline. At this time, industry demand began to bottom out, but due to the severe excess capacity, freight rates still could not rebound. .
In the fourth stage, when the capacity drops and the demand gradually increases with the economic recovery, the industry will be in short supply, the freight rate will start to rebound, and the whole industry will enter a new cycle.
This is repeated, again and again.
Since the U.S. subprime mortgage crisis broke out in the second half of 2008, the global economic recovery has not arrived. The current economic downturn has caused the global shipping industry to face serious overcapacity, low efficiency, serious pollution, and high costs. Superimposed on the political issues of global trade frictions, the entire industry is in a continuous downturn.
2. Pain points
As a traditional industry, the shipping industry currently has shortcomings:
1. The development model is relatively independent and closed, leading to asymmetric market information and too unitary industrial structure. Shipping companies have relatively limited decision-making methods, business models, and operating ideas. The traditional business model of consolidating fleets and scales is still the mainstream.
2. The cycle is too long and the efficiency is low. The main reason is that the industry information of various industries and departments is incomplete and opaque, forming a phenomenon of data islands, which ultimately leads to the overall inefficiency of the industry and the difficulty of ensuring information security.
3. The contradiction between shippers and shipping companies has intensified. With the overcapacity of the global shipping industry, mergers and acquisitions and reorganizations have been carried out in the industry to eliminate backwardness. Forging new alliances seems to have become the way for the industry to save itself in the past few years. However, the shipping industry of the alliance has not solved the needs of cargo owners. In fact, in recent years, cargo owners have never stopped questioning the alliance’s shipping schedule, service quality and punctuality; in addition, personalized needs and differences Chemical services are also the “pain point” of the current alliance.
At a time when the global shipping industry is stuck in a supply-demand imbalance and shipping companies are struggling to survive, Maersk Shipping, the “boss” of the global shipping circle, has been able to survive, and its profits far exceed its peers. Obviously, Maersk has found a way to win.
So let’s analyze today how Maersk achieved a headwind in the shipping industry.
How does Maersk do it?
1. Features of blockchain
Based on the pain points of the shipping industry, let’s take a look at the characteristics of the blockchain. The main features of blockchain:
One is that the data cannot be tampered with.
The second is decentralization. It can be understood here that no subject can change rules or tamper with content at will, which will make the platform based on blockchain technology appear more neutral.
The third is a distributed architecture. Each participant is a node with the same data stored in real-time synchronization and cannot be tampered with. This enables multi-party collaboration between untrusted entities to be achieved by trusting the blockchain platform. Reduce the cost of trust.
Fourth, the blockchain can execute programs that cannot be tampered with, that is, smart contracts. Smart contracts can be set to automatically execute preset operations when certain conditions are met, which can achieve automated business execution and reduce costs.
2. Tradelens came into being
From 2015 to 2016, the world’s container shipping demand was much lower than expected, and supply was severely oversupply. Maersk, the world’s largest shipping company in terms of cargo volume, was also hit hard. Its annual revenue dropped sharply. The situation was serious, making Maersk uncomfortable. Don’t make changes.
So in September 2016, Maersk adjusted its new direction and decided to split it into two sectors-one is the transportation and logistics sector and the other is the energy sector. The latter will be split or sold one after another. Maersk is ultimately positioned as an end-to-end container logistics company, committed to providing customers with end-to-end supply chain management solutions.
After repositioning, Maersk also formulated three development directions for the future:
(1) Further enhance customer experience.
(2) Optimize the structure to improve efficiency.
(3) Optimize capital and treat every acquisition with caution.
Based on years of shipping experience, when considering optimizing the entire structure to improve efficiency, Maersk focused on the cross-organizational business process and information exchange in the shipping process, which requires a lot of labor costs. How to optimize this part, Maersk thought of the future Direction-Digitalization of the shipping industry.
In the process of finding a solution, Maersk focused on the emerging technology of blockchain, and through cooperation with IBM, it built an open and neutral supply chain platform based on blockchain technology, and this is – Tradelens .
In March 2017, Maersk announced that it had completed the first blockchain trial, which has since opened the way for Tradelens to gather global shipping companies.
3. How does Tradelens solve the pain points of the shipping industry and how does it achieve this result?
Maersk studied those expenditures that were not shown in digital form on the documents and the funds of the entities involved. The entire industry can reach trillions of dollars.
In the traditional shipping process, there are many roles involved, such as shippers, shipping companies, freight forwarders, port and terminal operators, inland transportation and customs, etc. Each time you communicate with any of these roles, you need to prepare file. However, the shipping industry still relies heavily on paper-based trade and manual document processing methods, which has led to increasing costs and severely affected business continuity.
The first step of Maersk is to build a platform to start the digitalization of its business. Why do all walks of life still use paper-based office methods when the Internet is so developed? Because data on the Internet is easily attacked and tampered with, how to ensure that the data delivered to different companies is consistent?
We can’t easily believe the information transmitted on the Internet, but the blockchain platform is different. Once the data is on the chain, it cannot be tampered with, and the source can be traced to prevent evil, which can ensure the security of the data. At the same time, the data on the blockchain is the same for all nodes, so all participating companies can obtain information at the first time, which can also prevent companies from passing on different information to do evil.
Therefore, this step is to make all business links paperless and upload data to the platform so that all participants can access transportation data and transportation documents in real time. Among them, Maersk also uses Internet of Things technology to obtain sensor data from temperature control to container weight, so that decision makers can grasp real-time information more accurately.
It looks great, but new problems will soon appear. If every participant can see all the information, then for some companies, they are unwilling to disclose their data to everyone, they will Rejection from joining Tradelens.
In this regard, Tradelens cleverly designed a topological network structure and made a permission matrix to accurately manage the permission of each participant to read the data, which can ensure that the trans-oceanic carriers are isolated from each other. It means that Tradelens will establish a channel for each participating ocean carrier, and sensitive information including documents will only be distributed to those nodes of the participating channel, which means that no customer information of a ocean carrier will be distributed To other ocean carriers.
This solves the problem of participant privacy protection.
The second step is to visualize the data collected on all platforms, so that participants can write more efficiently and at the same time make more precise operational decisions.
The third step is docking standards and open interfaces (Api). TradeLens provides a way for all licensed participants to cooperate with the TradeLens ecosystem and extract value from it. TradeLens is defined as a neutral platform that allows any participant anywhere in the world to use it. In addition, TradeLens is committed to standards and interoperability: The platform uses a data model and access control scheme consistent with UN/CEFACT to support interoperability with other data parties in the industry.
The above is the idea of the technical solution, but the specific implementation is also twists and turns.
For example, although we mentioned paperlessness lightly, it is very difficult to change industry habits, especially for the lower-level operators and small and medium-sized enterprises. However, Maersk is willing to spend money to guide operators to conduct online Operate, reward once for each order, so as to continue. If Maersk was a little conservative or stingy, instead of spending money to take the initiative, Tradelens would not be able to do it, which shows Maersk’s determination to reform.
For another example, a big problem is that shortly after Tradelens went online, other competitors were unwilling to become partners in consideration of business risks such as “competition”, “information security”, and “profit transfer”. This is very difficult. At the same time, there are still competition issues. In addition to Maersk’s Tradelens, my country’s COSCO SHIPPING Group COSCO has also built a similar blockchain platform and invited 9 major shipping companies and terminal operators such as CMA to jointly launch GSBN (Global Shipping Business Network Alliance), when GSBN was launched, it had a wider network than TradeLens, and the start was bright, which put a lot of pressure on Maersk.
Therefore, it is still necessary to solve the problem of neutrality. To this end, Maersk decisively transferred part of the shares in exchange for the support of CMA (CMA CGM) and MSC (Mediterranean Shipping Company, the world’s second largest shipping company). Firewire invested in CMA and MSC. The refrigerated container intelligent monitoring company, back-to-back, reduced the number of seats on the Tradelens board of directors and invited MSC and CMA to appoint directors, and other problems were solved.
The following story is that 5 of the world’s six major shipping giants have joined Tradelens, and Tradelens has become a leader since then.
Solution effect
1. From a micro point of view, the role of Tradelens in specific events is seen, among which participants have the most say.
The most intuitive feeling is to reduce costs and increase efficiency. The digital operation process helps shipping operators to effectively realize paperless, saving hundreds of thousands of dollars each year. In addition, some participants said that when they want to know where his container is, according to the traditional operation method, 5 people need to operate 10 steps, but on the TradeLens platform, only one person needs to operate one step. Dadi reduces the cost of communication.
Secondly, reducing costs and increasing efficiency in the process can directly reduce transportation time. In one case, the service shortened the total transportation time of packaging materials in the United States by 40%, thereby eliminating thousands of dollars in unnecessary costs. At the same time, empty containers can be used for circulation, and storage can be used more efficiently.
In addition, since all participants in the shipping industry put data and documents on the blockchain, all information can be traced back to the source, which can combat shipping fraud through methods such as confusing product markings and establish a truly credible trade network .
2. From a macro perspective, what effect has Tradelens finally achieved?
TradeLens began testing in 2017, and its ecosystem was established in 2018. By 2019, five of the world’s six largest shipping companies have participated in the platform.
Today, Tradelens currently has more than 175 organization members, including more than 10 ocean carriers, covering data from more than 600 ports and terminals. The platform has tracked the transportation process of 30 million containers, 1.5 billion events, and about 13 million published documents, and has covered more than two-thirds of the world’s container capacity. It is a well-deserved new leader in the shipping industry.
New platform thinking brought by blockchain
From the process of Maersk’s implementation of the blockchain platform, we have seen an interesting phenomenon. From the initial rejection of other shipping giants, Maersk has made the platform fairer through the use of decentralized methods, and then put the shipping industry into the six giants. Five of them are incorporated into the Tradelens platform. This is hard to see in the Internet platform, and this is the new platform thinking of co-construction and win-win brought by the blockchain.
So, why can the blockchain platform made by Maersk attract the participation of competitors, and do it better?
Because the Internet is a zero-sum game, a bigger company will be affected, so they will certainly not cooperate, but will instead build a similar platform to compete.
But the blockchain platform is different. First of all, the problems solved based on this platform are good for all participants, and this benefit does not come from squeezing the market of others, but from a platform based on new technology support. Everyone can reduce costs and increase efficiency when multi-party collaboration.
Secondly, the decentralization of the blockchain makes it possible for no subject to tamper with data and rules at will, but for multi-party governance, which makes it easier for other competitors to accept it.
Based on these characteristics, the speed at which the blockchain platform can gather more participants is far faster than the Internet platform. There is more help than others, and cooperation on the Internet platform everyone will worry that the opponent will become bigger and stronger. The cooperation on the blockchain platform not only has actual benefits and effects, but also does not worry about the other party becoming bigger, because it is decentralized, and multiple parties participate in governance, which is a real win-win situation, not some Internet platforms. Under the banner of the sharing economy, in fact, they are exercising monopoly. The advantages of the natural blockchain platform are very obvious.
This is a new cooperative thinking brought about by new technologies, which will reshuffle the original solidified market structure. Those who can keep up with this reform will inevitably become the leaders in the new market. Therefore, in the process of digital transformation, enterprises should pay attention to the new thinking and new solutions brought by the blockchain technology, as well as the difference between market cooperation and tradition.
Tradelens can do better
1. Tradelens makes the entire logistics data clear at a glance through paperless and visualization methods, which can help participants understand the entire situation more intuitively and make more precise decisions.
But at present, most companies still rely on manual decision-making. Since the entire logistics is becoming more and more digitalized, in the future, big data and artificial intelligence can be combined to provide more granular and more accurate shipping decisions. Cost reduction and efficiency increase are achieved to the extreme, and at the same time, combined with the smart contract of the block chain, the automatic execution can be achieved when the conditions are met, and the real smart logistics can be achieved.
2. Tradelens made by Maersk and my country’s COSCO COSCO have their own blockchain platforms, but this is not a competition like an Internet platform. Companies in the shipping industry can also participate, but from the perspective of blockchain , The information of the two companies is on their own platforms, forming data islands.
Although Tradelens adopts consistent technical standards, it is currently doubtful whether it can be successfully connected with other blockchains. Therefore, perhaps a blockchain technology called cross-chain technology needs to be used here, which allows for different blockchains. The data between them can interact. In this way, Tradelens and COSCO can develop according to their own ideas, and at the same time can be connected to a network through cross-chain.
3. This year, countries are racing to accelerate the advancement of their own central bank digital currency CBDC. Some countries have already issued them, such as Lithuania, Cambodia, etc. Some countries are already testing, such as China’s digital renminbi, and others are actively discussing and researching Centers such as digital euro and digital dollar. The digitization of currencies in various countries is also an inevitable trend in the future. If these digital currencies can be combined with smart contracts of the blockchain, then for blockchain platforms such as Tradelens, the trade can be cleared. The settlement function is also included to achieve the integration of business flow, logistics, information flow, and capital flow, which will further reduce costs and increase efficiency.
postscript
Looking back at Maersk’s deeds, we see that blockchain technology plays a pivotal role in the participation of multiple parties, such as logistics, not only for the company itself, but also for the entire industry to get rid of the traditional paper-based office and communication processes. Go lightly, find new profit points (saving money is making money), and have a second spring.
It is said that the ship is difficult to turn around, but on the other hand, Maersk also let us see how the giants turned around. First, the strong man cut off his business for many years, and then he dared to reposition and start from the new. In the process of implementing the digitalization of the industry, Maersk took the initiative to attack and resolve them one by one, showing us a textbook exploration.
It is worth mentioning that Maersk can make a smooth transition and the digitalization led by Tradelens is indispensable, but Maersk’s capital operation towards the strategic direction cannot be ignored. Aiming at an end-to-end container logistics company, it is also Maersk’s strategy to continue to acquire and invest in related companies and quickly build a stage around this goal. These are inseparable from its own courage and strategic in-depth thinking and foresight. This is exactly what we should learn from.
In the current situation where new technologies are gradually maturing and the trend of digitalization is becoming more and more intense, how companies should deal with them, which is a question worthy of consideration for all entrepreneurs.
Reference
1. Maersk, what kind of chess is next?
2. CMA CGM and Mediterranean Shipping completed the integration of TradeLens and joined the shipping platform jointly established by IBM and Maersk as a basic carrier
