China, Hong Kong take the lead in blockchain logistics: report
Touted as a game changer in the logistics sector, blockchain has yet to see widespread adoption in this $10 trillion industry. Technology took a big hit when Danish shipping giant Maersk (NASDAQ: AMKAF ) and IBM (NASDAQ: IBM ) announced the termination of TradeLens, a blockchain-powered supply chain platform. A report reveals that this has left China and Hong Kong at the forefront of blockchain logistics.
TradeLens failed to achieve “full global industry cooperation,” Maersk stated when announcing the end of the platform in November 2022. Despite being backed by the world’s second largest shipping company and a global technology giant, it failed to achieve commercial levels. viability necessary to continue operations.
With TradeLen’s demise, Hong Kong-based Global Shipping Business Network (GSBN) is now the world’s largest blockchain logistics platform.
The GSBN gathers eight members, each with equal voting rights. They include shipping companies Hapag-Lloyd (NASDAQ: HLAGF) and Cosco (NASDAQ: CHDGF), as well as shipping companies such as PSA International and Shanghai International Port Group.
While GSBN may not have Maersk’s financial muscle or IBM’s technical expertise, CEO Bertrand Chen believes it has a better chance than TradeLens.
Speaking to the South China Morning Post, Chen revealed that a key reason for TradeLen’s downfall was that most partners saw it as a product owned by Maersk, their biggest market rival. These partners were concerned that data shared or stored through TradeLens would be accessed by Maersk, giving the Danish giant an unfair advantage.
“The fact that TradeLens was seeded by Maersk, from a business perspective, was an obstacle to growth. Because some of the customers that they need to court say, ‘I don’t trust Maersk.’
Blockchain’s value proposition in the shipping and supply chain industry is clear. The sector still relies on outdated, mostly paper-based methods that are inefficient, slow and expensive. Digitization of industry can free up trillions of dollars.
But for blockchain to gain momentum, it needs the network effect, Chen added. A blockchain platform created and used by one company — much like TradeLens — is doomed to failure, he noted.
Goh Puay Guan, associate professor of supply chain at the National University of Singapore Business School, agrees.
“Of course, the challenge is to get all companies on board, because only when you have an integrated platform do companies actually benefit from that integration,” he told Posten.
Chen knows all too well that getting more players on board GSBN – especially outside of Hong Kong and China – is crucial if the platform is to avoid the same fate as TradeLens. Currently, only Singapore-based PSA International and Germany’s Hapag-Lloyd are not based in Hong Kong or China in the GSBN network.
Chen has global ambitions. He told the outlet that GSBN is targeting European shipping lines and even hopes to bring Maersk in the future, a task he admits “could be a bit challenging.”
For now, China will hold onto the lead. For the first time ever, the country applied blockchain to the entire process of cross-border shipping from Sichuan province to neighboring Laos last December.
Meanwhile, supply chain management on the Bitcoin blockchain has made great strides in recent years. Norwegian startup UNISOT has set the pace and has recently partnered with nChain to scale its blockchain services.
See: Blockchain for Digital Transformation of Nations
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