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24/01/2018at 14:11

Professor questions several aspects of Maersk and IBM's blockchain project

Despite massive exposure, it is far from certain that Maersk and IBM will win the digitalization race in the shipping sector, says Shipping Professor Roar Os Ådland. Blockchain is at best at a beta stage, he tells ShippingWatch.
by SØREN PICO

BERGEN

It is far from certain that Maersk and IBM will win the race to produce the future data platform for shipping despite massive attention and interest in the two parties' collaboration, says Shipping Professor Roar Os Ådland when ShippingWatch meets him in Bergen.

From the ridge where the Norwegian School of Economics is located, with a view of the fjord by the Norwegian shipping town, he follows the global trends characterizing the sector these years – everything from new fuel solutions to the development of digital solutions in the supply chain.

Maersk and IBM recently announced their plans to develop a new digital platform for the shipping sector, a platform based on the so-called blockchain technology.

Despite huge interest in the new company, there is still a long way to go, says Ådland.

"I still believe that the application of blockchain is, at best, at 'beta stage' and has, for instance, scaling problems," he says.

At the moment for most people, it's a good marketing story so it gives good exposure and provides good marketing value just to be involved in that space and that is kind of how it is now"

Roar Os Ådland, Shipping Professor, Norwegian School of Economics
"It's still very early stages and the technology is not mature and possibly the technology we see now is not where we will end up," he explains:

"There are a lot of different ways to go in terms of distributed storage, applications and data sharing for the industry and I don't think the technical guys have figured it out yet."

"A good marketing story"

The cooperation between major players such as Maersk and IBM is interesting, says Ådland.

That Maersk, as the world's biggest container carrier, takes the first step and is working to get competitors on board the solution increases, he says, the potential for the platform to become a common global standard.

"Which is a good thing," he tells ShippingWatch.

"This obviously links to the benefit of sharing data, though blockchain technology also allows participants to selectively share information – an important trait," he says, noting that carriers have traditionally been very hesitant to share data with competitors.

But there are still many questions that need to be answered before one can conclude that Maersk and IBM will win the race to digitize shipping, says the professor.

"At the moment for most people, it's a good marketing story so it gives good exposure and provides good marketing value just to be involved in that space and that is kind of how it is now. We don't really see how the practical applications will be yet."

Maersk, IBM and Blockchain

  • Maersk and IBM will establish a joint venture which aims to "provide more efficient and secure methods for conducting global trade using blockchain technology"
  • The new company will be based in New York, and Maersk will own 51 percent
  • The aim is to offer a jointly developed digitization platform for global trade, which is based on open standards and is designed to be used by the entire global shipping ecosystem
  • It will take two or three years before the collaboration really proves to be a good business for the companies, said newly appointed manager Mike White to Danish media Finans last week
  • Maersk Line and IBM formed a partnership in March 2017 to develop the so-called blockchain technology through a platform dubbed Global Trade Digitization
  • IBM's Head of Global Trade Digitization, Norbert Kouwenhoven, told ShippingWatch last year that "there are 27 billion euros of savings to gain between the supply chain partners just from efficient sharing of information and most of it comes from documents which can be easily accessed or can be generated"

More players a key factor

Maersk and IBM announced last week that the two companies are joining forces to develop a trade platform for the transport sector. The joint company will be headquartered in New York, where the platform will be "built on open standards and designed for use by the entire global shipping ecosystem," as the parties said in the press release last week.

"This new company marks a milestone in our strategic efforts to drive the digitization of global trade. The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit," said Maersk's Vincent Clerc, who will serve as chairman of the new company.

Mike White will handle daily management of the company, and in an interview with Finans he explained that the partners in the venture anticipate "a successful business model."

"But it's a journey that will take two-three years in order to get a broad ecosystem on board," he told Finans.

Players such as Hapag-Lloyd and MSC have already publicly addressed the platform, which depends on the participation of other stakeholders in the shipping sector.

Just as Ådland points to the need for participation from other players, Seaintel makes a similar point in an analysis published earlier this week. The analyst firm here noted that participation from forwarders, ports, terminal operators and customs authorities will be decisive in terms of whether blockchain becomes a success.

Seaintel also noted that there is competition in the field, and that Maersk and IBM are far from the only ones exploring the area.

Roar Os Ådland

  • Shipping chair professor at Norwegian School of Economics in Bergen. Focus areas include "transport and logistics", "freight derivatives", "shipping economics" and "commodity trade"
  • Appointed professor in 2012 and, according to the university, serves as Bergen Shipowners' Association Chair of shipping economics at the Center for Shipping and Logistics
  • Has worked at Clarksons Platou, most recently as freight derivatives portfolio manager at Clarksons Fund Management from 2006 to 2011.
Source: Norwegian School of Economics

English Edit: Daniel Logan Berg-Munch

SeaIntel: The success of Maersk and IBM depends on industry participation 

Maersk and IBM's new partnership met with interest in the industry 

Maersk and IBM to launch blockchain joint venture 

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