Cryptocurrency

Blockchain-based supply chain platform canned by IBM and Maersk

United States technology company IBM and Danish logistics firm Maersk have decided to discontinue their co-developed blockchain-backed supply chain platform, TradeLens, citing a lack of “global industry collaboration” as a key reason behind the decision.

Maersk stated on Nov. 29 that it has begun taking immediate action to cease operations on the platform which should take full effect by Q1 2023:

“The TradeLens team is taking action to withdraw the offerings and discontinue the platform […] During this process all parties involved will ensure that customers are attended to without disruptions to their businesses.”

While the blockchain-based shipping solution was introduced by the two firms in August 2018 to help industry participants adopt more efficient international supply chain practices, Maersk stated the platform didn’t reach a level of “commercial viability” to sustain operations:

“While we successfully developed a viable platform, the need for full global industry collaboration has not been achieved,” said Maersk’s head of business platforms, Rotem Hershko. “As a result, TradeLens has not reached the level of commercial viability necessary to continue work and meet the financial expectations as an independent business.”

Maersk said the firm would continue its efforts to digitize the supply chain and increase industry innovation through alternative solutions to achieve the desired ends that were envisioned through TradeLens.

TradeLens functioned by tracking and processing critical supply chain data of each shipment in real-time, before stamping a distributed and immutable record of events on-chain for all involved participants to access and validate.

Related: How blockchain technology is used in supply chain management?

Despite TradeLens not reaching the heights that IBM and Marersk first envisioned, the two companies managed to onboard over 150 companies onto the supply chain-focused blockchain which included a host of port operators, shipping companies and logistics providers.

Among those companies were two of the world’s largest container carriers, CMA CGM and Mediterranean Shipping Company, which integrated the system in October 2020.

The discontinuation of TradeLens comes as data from IBM claims the platform saved users an estimated 20% in documentation costs and reduced the time it takes to ship goods by 40%.

According to Statista, blockchain technology makes keeping data records easier, more transparent, and more secure mostly due to its immutable nature.

Despite this, several shortcomings continue to stall blockchain adoption in the supply chain world, including high transaction costs, privacy concerns, scalability issues and lack of industry collaboration, as evidenced by the lagging adoption of TradeLens.