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Op-Ed: Outsiders Needed to Digitalize Ocean Freight Industry

Maersk has terminated Tradelens - who will now digitalize the shipping industry?

iStock photo of port
iStock / Primeimages

Published Apr 20, 2023 1:21 PM by Thomas Donslund

It is a known fact that the shipping industry suffers from lack of digitalization. Even though one single container transport from Asia to Europe may involve many separate companies and stakeholders, it still requires loads of paper documents and manual spreadsheets. As odd as it may seem in 2023.

This makes administration unnecessarily expensive as status of shipments has to be done manually. There is no doubt that a full digitalization of the supply chains will cause this expense to drop significantly. Those who succeed in setting the agenda for global digitalization will be in a very strong position in the future transportation market. It was with this strategy in mind that Maersk and IBM rose to the challenge and launched the ambitious blockchain project Tradelens in 2018.

At first, it looked promising: Many of the major container carriers supported the project, and in 2020, they began testing the platform. But in a surprising turn of events, Maersk recently announced that Tradelens would be shut down. We can only speculate on when and why the competitors decided not to share their data after all. This leads to a thought-provoking conclusion: Even as the benefits of global digitalization are completely obvious, one of the largest shipping companies in the world still failed to create the necessary momentum.

Apparently, the industry cannot digitalize itself

The shutdown of Tradelens suggests that digitalization must come from outside. The major shipping companies are in too direct competition with each other to truly commit to sharing data. In the case of Tradelens, this reluctance was reinforced by the fact that the platform had a commercial focus – Maersk wanted to make money from it. Therefore, the other shipping companies naturally focused on what they would get in return for strengthening Maersk by sharing their data - and it was clearly not enough.

We've seen this pattern before. The large, established players are too ingrained in their industry; they are heavily invested in many different assets, and they were not born digital. Thus, it was neither Hilton nor Marriott that revolutionized their industry with hotels.com or Airbnb. It was smaller, agile startups with the right ideas and neutral market positions that made them more obvious gathering points. They could offer new, strategic business opportunities that didn't put money in the pockets of competitors.

So, now what?

Should we just accept that global digitalization of the shipping industry is delayed indefinitely? No - not at all. The idea of building a global, digital platform for managing maritime logistics is clearly the right way forward. But who is positioned to give the industry's players enough advantages to make them share their data? Software companies such as Flexport, Forto and Freightos are good candidates. Also, Amazon has just announced its AWS Supply Chain Visibility platform. Another possibility is that the large TMS platforms advance into the field that Tradelens has now left. In their case, precise supply chain information can be exchanged via open APIs, and the data already exist.

The winning formula requires freedom to experiment

The big question is: Who will be the first to tie all the links together? Nobody knows for sure. The termination of Tradelens suggests that the decisive breakthrough will not start in the shipping industry's own ranks. My guess is that the winners will be found among new software companies with a higher degree of freedom to search for the digital disruption that will finally rid the industry of paper piles and manual spreadsheets all over the world.

Thomas Donslund is CTO of port intelligence data firm GateHouse Maritime.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.