Column introduction
Unknowingly, the blockchain has been developed for nearly 10 years, but even now some people still question that the blockchain has no practical application at present, but on the contrary, with the technology accumulation and industry exploration in the past few years, the blockchain It has quietly taken root in some industries...
The column of Blockchain Application Cases is intended to explore the real implementation of the blockchain through some specific cases of the combination of the blockchain and the real industry, and to inspire enterprises or blockchain practitioners.
Unknowingly, the blockchain has been developed for nearly 10 years, but even now some people still question that the blockchain has no practical application at present, but on the contrary, with the technology accumulation and industry exploration in the past few years, the blockchain It has quietly taken root in some industries...
background
The column of Blockchain Application Cases is intended to explore the real implementation of the blockchain through some specific cases of the combination of the blockchain and the real industry, and to inspire enterprises or blockchain practitioners.
As the leader of global shipping companies, Maersk Group (Maersk Group) also suffered an unprecedented crisis in 2015, but this giant company decisively chose the reform of breaking the boat and climbed out of the bottom in just four years. And Tradelens, a well-known shipping platform built on the basis of blockchain technology, has become the largest shipping blockchain platform in the world, so how did they use blockchain technology to create this miracle, and how did they bottom out? In this article, I will dismantle it in detail for you, and enjoy the following.
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1. Basic situation of the shipping industry
The new crown is not over, and global trade disputes are intensifying. In the short term, the global economy has not yet seen the time point when the concentration of risks will be lifted. It remains to be seen whether the recession will continue in the medium and long term. Look, the main determinant of the return of the supply side is the achievement of the results of the Sino-US peace talks; what we know is that no matter what the outcome of the US election is, the trade friction between China and the US will exist for a long time, so shipping is the main source of 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 and presents a very strong cycle. The cyclicality of the shipping industry can be roughly divided into four phases:
In the first stage, the economic situation recovers and the demand for shipping capacity rises. However, the supply of shipping capacity in the industry is still at a low level at this time, and the supply exceeds demand in a short period of time. The freight rate rises rapidly, and new shipbuilding orders in the industry increase sharply.
In the second stage, as the demand for shipping 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 stage began to be delivered, and the industrys shipping capacity began to increase rapidly.
In the third stage, due to the large increase in transport capacity in the early stage, the supply in the industry exceeded demand, resulting in excess supply of transport capacity, and the freight rate began to decline. At this time, the industry demand began to bottom out, but due to the serious excess capacity, the freight rate still could not rebound. .
In the fourth stage, when the shipping capacity declines and the demand gradually increases with the economic recovery, the industry will experience a shortage of supply, and the freight rate will start to rebound again, and the entire industry will enter a new round of cycle.
So repeated, again and again.
Since the outbreak of the US subprime mortgage crisis in the second half of 2008, the global economic recovery has not come, and the current economic downturn has caused the global shipping industry to face serious problems such as excess capacity, low efficiency, serious pollution, and high costs; Superimposed on the political issues of global trade frictions, the entire industry is in a state of continuous downturn.
2. Pain points
As a traditional industry, the shipping industry currently has shortcomings in:
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 eventually leads to the overall low efficiency of the industry and the difficulty of ensuring information security.
3. The contradiction between cargo owners and shipping companies has further intensified. With the excess capacity of the global shipping industry, mergers and acquisitions in the industry, elimination of backwardness, and formation of new alliances seem to be the way for the industry to save itself in the past few years. However, the alliance shipping industry has not solved the needs of shippers. In fact, in recent years, shippers have never stopped questioning the stability of the alliances shipping schedule, service quality and punctuality. In addition, individual needs and differences The personalized service is also the pain point of the current alliance.
When the global shipping industry is deeply in the dilemma of supply-demand imbalance and shipping companies are struggling to survive, Maersk Line, the boss in the global shipping circle, is riding the dust, and its profits far exceed those of its peers. Obviously, Maersk has found a recipe for victory.
So lets analyze today how Maersk has turned around against the wind in the shipping industry.
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How does Maersk do it?
1. Features of blockchain
Based on the pain points of the shipping industry, lets take a look at the characteristics of the blockchain. The most important features of the blockchain are:
One is that the data cannot be tampered with.
The second is decentralization, which can be understood here as no one subject can change the rules or tamper with the content at will, which will make the platform based on blockchain technology appear more neutral.
The third is a distributed architecture. Each participating subject is a node, which stores the same data, and real-time synchronization cannot be tampered with. This allows multi-party collaboration between untrustworthy subjects to be achieved by trusting the blockchain platform. Reduce trust costs.
Fourth, the blockchain can execute non-tamperable programs, that is, smart contracts. Smart contracts can be set to automatically execute preset operations when certain conditions are met, which can realize automated business execution and reduce costs.
2. Tradelens came into being
From 2015 to 2016, the worlds container shipping demand was much lower than expected, and the supply was seriously exceeding demand. Maersk, the company with the largest cargo volume in the global shipping industry, was also hit hard, with a sharp drop in annual revenue. Dont make changes.
So in September 2016, Maersk adjusted its new direction and decided to split into two departments-one is the transportation and logistics department, and the other is the energy department, which will be spun off 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 has also formulated three development directions for the future:
(1) Further enhance customer experience.
(2) Optimize the structure and improve efficiency.
(3) Optimize capital and treat each acquisition with prudence.
Based on years of shipping experience, when Maersk considered optimizing the entire structure to improve efficiency, it focused on the fact that in the shipping process, cross-organization business processes and information exchange require 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. 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 experiment, and since then it has opened up the hegemony of Tradelens gathering global shipping companies.
3. How does Tradelens solve the pain points of the shipping industry, and how does it achieve this result?
Maersk looks at the amount of money spent on documents that don’t show up in numbers and the entities involved, which can add up to trillions of dollars across the industry.
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., and every time you communicate with any of these roles, it means that you need to prepare document. But to this day the shipping industry still relies heavily on paper-based trade and manual documentation, resulting in increasing costs and severely impacting business continuity.
The first step for Maersk is to build a platform to digitize business transactions. Why do all walks of life still use paper-based office methods today when the Internet is so developed? Because the data on the Internet is easy to be attacked and tampered with, how to ensure that the data delivered to different enterprises is consistent?
We cannot easily trust 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 transmitting 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 the Internet of Things technology to obtain sensor data ranging from temperature control to container weight, so that decision makers can more accurately grasp real-time information.
It looks great, but new problems quickly arise, if every participant can see all the information, for some businesses, they are not willing to disclose their data to everyone, they will Repulsion added to Tradelens.
In this regard, Tradelens has cleverly designed a topological network structure and made a permission matrix to precisely manage the permission of each participant to read data, which can ensure that cross-ocean carriers are isolated from each other, as shown in the figure below Means that Tradelens will set up a channel for each participating ocean carrier, and sensitive information including documents will only be distributed to those nodes participating in the channel, which means that no customer information of an 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 by all platforms, so that participants can write more efficiently and make more accurate operational decisions.
The third step is to connect to standards and open interfaces (Api). TradeLens provides a way for all licensed participants to collaborate with and extract value from the TradeLens ecosystem. TradeLens is defined as a neutral platform that allows any participant anywhere in the world to use it. Additionally, TradeLens is committed to standards and interoperability: the platform uses a UN/CEFACT-aligned data model and access control scheme to support interoperability with other data parties in the industry.
For example, although we lightly mentioned paperless, it is very difficult to change industry habits, especially for low-level operators and small and medium-sized enterprises, but Maersk is willing to spend money to guide operators to carry out online operations. Operation, every operation is rewarded once, so as to promote it. If Maersk was a little more conservative, or stingy, instead of spending money to take the initiative, Tradelens would not be able to do it, which also shows Maersk’s determination to reform.
For another example, a big problem is that shortly after Tradelens was launched, other competitors were unwilling to become partners due to commercial risks such as horizontal competition, information security and benefit transfer, which made it very difficult. At the same time, there is also the issue of competition. 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 including CMA to jointly launch the GSBN (Global Shipping Business Network Alliance), when GSBN was launched, it had a wider network than TradeLens, and it had a bright start, which put a lot of pressure on Maersk.
Therefore, we still need to solve the problem of neutrality. For this reason, Maersk decisively transferred part of the shares in exchange for the support of CMA (French CMA CGM) and MSC (Mediterranean Shipping Company, the second largest shipping company in the world), and FireWire invested in CMA and MSC The refrigerated container smart monitoring company, back to back, and by reducing the number of seats on the Tradelens board and inviting MSC and CMA to serve as directors, other problems were solved.
The following story is that 5 of the worlds six largest shipping giants joined Tradelens, and since then Tradelens has become a leader.
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Solution effect
1. Look at the role Tradelens plays in specific events from a micro perspective, and the participants have the most say.
The most intuitive feeling is to reduce costs and increase efficiency. Digitizing operational processes has helped shipping operators effectively go paperless, saving hundreds of thousands of dollars annually. In addition, some participants said that when they want to know where his container is, according to the traditional operation method, five people need to operate 10 steps, but on the TradeLens platform, only one person needs to operate one step. Greatly reduces communication costs.
Secondly, reducing costs and increasing efficiency in the process can directly reduce transportation time. In one case, the service reduced the total shipping time of packaging materials to production lines in the US by 40%, eliminating thousands of dollars in unnecessary costs. At the same time, it can also allow empty containers to be used for circulation and make more efficient use of storage.
In addition, since all parties involved in the entire shipping put data and documents on the blockchain, all information can be traced, which can combat shipping fraud through methods such as confusing product marks, and establish a truly credible trade network .
2. From a macro perspective, what effect did Tradelens finally achieve?
TradeLens began testing in 2017, its ecosystem was established in 2018, and by 2019, five of the worlds six largest shipping companies have participated in the platform.
Today, Tradelens has more than 175 organizational 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 covers more than two-thirds of the worlds container capacity, and 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, to Maersk’s use of decentralized methods to make the platform more fair, and then put the six giants in the shipping industry Five of these are integrated into the Tradelens platform. This is difficult 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 make it better and better?
But the blockchain platform is different. First of all, the problems solved based on this platform are beneficial to all participants, and this benefit does not come from the market that squeezes others, but from the platform based on new technology support. When everyone cooperates with multiple parties, they can reduce costs and increase efficiency.
Secondly, the decentralization of the blockchain allows no one subject to tamper with data and rules at will, but multi-party governance, which makes it easier for other competitors to accept.
Based on these characteristics, the speed at which the blockchain platform gathers more participants is far faster than that of the Internet platform. If there is a right way, there is more help than when there is no right way, but when there is cooperation on the Internet platform, everyone will worry that the opponent will become bigger and stronger. The cooperation on the blockchain platform has both actual benefits and effects, and will not worry about the other party becoming bigger, because it is decentralized, and multiple parties participate in governance, which is a real co-construction and win-win situation, not some Internet platforms. Under the banner of the sharing economy, it is actually a means of 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, and those who can keep up with this trend of reform will inevitably become leaders in the new market. Therefore, in the process of digital transformation, enterprises should pay attention to the new thinking, new solutions brought by blockchain technology, and the differences between market cooperation forms and traditions.
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Tradelens can do better
2. Tradelens made by Maersk and my country’s COSCO SHIPPING COSCO have their own blockchain platforms, but this is not a competition like Internet platforms. Companies in the shipping industry can also participate in it, but from the perspective of blockchain , The information of the two companies is on their own platforms, forming a data island.
postscript
Although Tradelens has adopted consistent technical standards, it is doubtful whether it can smoothly connect with other blockchains. Therefore, perhaps a blockchain technology called cross-chain technology is needed here, which allows different blockchains to communicate with each other. The data between them can interact, so that Tradelens and COSCO can develop according to their own ideas, and at the same time, they can be connected into a network through cross-chain.
3. This year, countries are competing to accelerate the advancement of their own central bank digital currency CBDC. Some countries have already issued it, such as Lithuania, Cambodia, etc., and some countries are already testing it, such as my country’s digital renminbi, and some are actively discussing and researching it. Centers, such as digital euros and digital dollars, the digitalization of currencies in various countries in the future is also an inevitable trend, so if these digital currencies can be combined with blockchain smart contracts, then for blockchain platforms such as Tradelens, trade clearing The settlement function is also included, so that the four flows of business flow, logistics, information flow, and capital flow can be integrated into one, which will further reduce costs and increase efficiency.
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Looking back at Maersks deeds, we can see that blockchain technology plays a pivotal role in scenarios such as logistics involving multiple parties, not only for the enterprise itself, but also for the entire industry to get rid of the traditional paper-based office, communication and other heavy processes. Travel lightly, find new profit points (saving money is making money), and rejuvenate your business.
References
It is said that it is difficult for a ship to turn around, but on the other hand, Maersk also let us see how the giants turn around. First, a strong man cut off his business for many years, and then he dared to reposition and start again. In the process of promoting the digitalization of the industry, he encountered many obstacles, but Maersk took the initiative to attack and resolved them one by one, showing us a textbook-like exploration.
It is worth mentioning that the smooth transformation of Maersk is due to the digitalization led by Tradelens, but the capital operation of Maersk in the strategic direction cannot be ignored. Aiming at an end-to-end container logistics company, continuous acquisitions of investment-related companies, and quickly building a stage around this goal are also Maersks winning strategy. And these are inseparable from its own boldness and strategic in-depth thinking and foresight, which is what we should learn from the most.
