Why did Tradelens fail? & coming of new leading platform(s)?
8th Issue within LogTech Reviews & Info - TradeLens was a fenomen within the supply chain hype on blockchain, why is it gone (?) when crypto is rising to its all-time-high?
As a Supply chain and Logistics Expert I am issuing insights and letters in 3 workstreams: A) Logistics & Shipping Industry Insights, B) LogTech Reviews & Info and C) SAP Logistics Explanations & Updates. This time we zoom into LogTech Reviews & Info workstream.
Why am I writing this now: Between years 2018 to 2022 I was myself blockchain evangelist and did collaborate with many such start ups (TradeLens, TEU Token, Sweetbridge, IOTA) to promote higher value and exciting technology. I had multiple touchpoints and promotional events for blockchain and therefore feel a need to conclude this one era with a closure.
E.g. one for many - webinar on blockchain from spring 2018:
Video credit: wise-chain-consult.com & AmberRoad
1. Blockchain Promise to Supply Chain
Blockchain was heralded as a revolutionary technology for supply chains, offering transparency, traceability, and secure data sharing without intermediaries. Its promise included reducing fraud, improving real-time visibility, and securing document authenticity—ideal for industries like logistics, where data sharing and verification are critical. Yet, the complexity and high costs associated with blockchain implementation, along with limited proven success in large-scale applications, made it challenging for TradeLens to fulfill these promises within the logistics context.
2. What Was TradeLens?
a) Organization: TradeLens was organized as a partnership between IBM, a technology provider, and Maersk, a leading shipping company. Despite IBM's role in providing blockchain technology, Maersk led most operational aspects, which caused concerns among competitors who were hesitant to join a platform owned by a direct rival. This structural setup created trust issues that limited adoption.
b) Technology: TradeLens utilized Hyperledger Fabric, a private blockchain framework that allowed for controlled data access and transactional transparency. Although still blockchain, it is highly centralized solution, contrary to common understanding that blockchain is fully immutable, decentralized architecture. This was causing reluctance among competitors wary of data privacy issues or of dependency. Participants may not have fully trusted that Maersk would not access or monitor sensitive data.
c) Value Proposals: TradeLens promised to streamline and secure data exchange across the supply chain, reducing inefficiencies in document handling and improving the visibility of goods in transit. It included use cases for real-time tracking and introduced an electronic Bill of Lading (eBL) to digitize key shipping documents, aiming to eliminate manual paperwork and fraud.
Photo credit: tradelens.com
3. Key Milestones of TradeLens
TradeLens was established as a collaboration between Maersk and IBM, aiming to transform global supply chains by introducing blockchain for enhanced transparency and efficiency. The platform launched with significant interest, initially attracting several major industry players. However, despite Maersk’s push, the critical mass needed to create a network effect was never fully achieved. In 2022, after years of struggle to gain traction, Maersk and IBM made the decision to discontinue TradeLens.
Some Key Milestones:
4. So Why Did It Fail?
Several aspects may have led to this, here are few considerations on why:
a) Low Business Case Value
TradeLens struggled to demonstrate a compelling business case. The logistics industry operates on narrow margins, and the added complexity and cost of blockchain didn’t provide sufficient ROI compared to conventional technologies. For many transactions in logistics that lack inherent value (such as visibility data), blockchain created unnecessary computational overhead.
b) Organizational Arrangements
TradeLens was embedded within Maersk's operations, blurring boundaries between platform and provider. Maersk’s dominance raised concerns about control, with other carriers fearing that Maersk could access and leverage sensitive data for competitive advantage. Many believed an independent consortium might have fostered greater trust and broader participation.
c) Pricing Was High
The pricing for TradeLens’s services was perceived as high. Although the platform offered visibility and data verification, its premium pricing was challenging to justify, especially since similar services could be obtained at lower costs without blockchain’s complexity. This misalignment between pricing and perceived value contributed to low adoption.
d) Data Governance & Private Blockchain
The choice of a private blockchain structure further diminished trust. Hyperledger Fabric’s central deployment with only features of blockchain as data linking and hashing represented limited value, which contradicted the core value of blockchain’s decentralization. Participants were wary of Maersk’s role as a data gatekeeper, undermining the collaborative nature essential for the platform’s success.
e) Maersk's Radical Decision-Making Culture
Maersk’s quick, pragmatic decision-making style, focused on financial sustainability, ultimately led to TradeLens’s shutdown. Once it became clear that TradeLens was not producing the desired financial results, Maersk swiftly cut its losses. This abrupt decision ended the project without exploring options like reconfiguring or scaling down the platform.
f) eBL Was a Viable Use Case?
The electronic Bill of Lading (eBL) was one of the more promising use cases within TradeLens. It aimed to ensure authenticity and streamline document handling. However, even with its potential, eBL adoption remained low, partly because of regulatory barriers. Lets don’t forget there are other platforms running successfully eBL today (GSBN, Wave, CargoX).
g) China Had Its Own Solutions
China, a key player in global ocean shipping, was hesitant to adopt a foreign-owned solution, given regulatory concerns over data sovereignty. China developed parallel platforms (GSBN), limiting TradeLens's global reach and excluding a significant portion of the shipping industry.
h) Customs Too Complicated
Navigating customs processes proved a formidable challenge for TradeLens. Customs systems vary significantly across countries, often relying on paper documentation and rigid protocols that blockchain couldn’t easily integrate with. Standardizing customs across borders required considerable resources and was far beyond TradeLens’s capabilities.
5. Conclusion & Lessons Learned
The failure of TradeLens underscores the importance of aligning technology with practical business needs and stakeholder trust. Key lessons from this case include the necessity of an independent governance structure to foster cross-industry trust and the challenge of implementing private blockchain in an ecosystem wary of data control by a single player. Additionally, regulatory and competitive environments, such as China’s parallel solutions and customs complexity, further demonstrated that blockchain’s potential benefits did not overcome its limitations within logistics.
While blockchain holds promise for specific use cases like eBL, TradeLens’s experience shows that a broader application may be premature or require more industry-standard approaches, possibly in a nonprofit, consortium-driven model that ensures impartial governance.
Building on an evaluation by Lars Jensen (here) where he states, “This should not be seen as an indication that blockchain does not have a place in shipping - it likely does for some uses.”, I would add that such initiative was a) little too prematurely baked and b) not rightly executed. I am certain that in mid-term we see new platforms (may not be full blockchain) that will start facilitate our international trade in paperless, transparent but also unbiased matter.
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Thank you!
Jakub
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The text, knowledge and conclusion in this article is NOT generated by AI, it is human-written.
Thank you for sharing your great insight. Spot on!