By
Godfrey Benjamin
January 22nd, 2024
Maersk has indicated that it will leverage the work of TradeLens as a stepping stone to further digitizing its global operations.
TradeLens, a blockchain-enabled shipping solution developed by International Business Machines Corp (NYSE: IBM) in collaboration with Maersk, will be discounted by the end of the first quarter of next year. According to an official announcement by Maersk, TradeLens has not attracted enough volume to meet the expected financial investment. Launched back in 2018, IBM and Maersk have been working to harness blockchain prowess in the global shipping industry.
Moreover, blockchain technology significantly reduces friction between trading partners by eliminating third parties like banks. Additionally, blockchain technology has been described as a game changer in the shipping industry due to its incorruptible nature. Nonetheless, IBM and Maersk have indicated that the lack of international collaboration led to the closure of TradeLens.
“Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved. 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,” Rotem Hershko, Head of Business Platforms at A.P. Moller – Maersk noted.
Maersk has indicated that it will leverage the work of TradeLens as a stepping stone to further digitizing its global operations.
Bigger Picture on Failure TradeLens Planned by Maersk and IBM
Blockchain technology has been significantly harnessed by the cryptocurrency market in the past decade. At its peak, blockchain technology through the crypto market handled around $3.2 trillion. As such, institutional investors have been looking for ways to combine their operations with the blockchain and cryptocurrency industry.
The Danish shipping company has operations in 130 countries and employs more than 100,000 people. With a goal of becoming climate neutral by 2040, the company has identified emerging technologies as crucial to achieving its global mission.
However, the recent happenings in the crypto market – Terra Luna, FTX, and Alameda’s collapse – have induced fear of investing and using the technology. Global regulators are more skeptical about issuing operating licenses to blockchain and cryptocurrency companies, particularly centralized firms.
Moreover, blockchain-related companies are said to collect crucial personal data and monetize it. Additionally, blockchain attacks have been deemed too expensive since asset recovery is almost next to impossible. For instance, the FTX and Ronin Bridge hackers have not yet been arrested or funds amounting to over $1 billion recovered.
As such, blockchain and cryptocurrency technology will have a steeper incline to tackle to achieve global adoption. Approximately 300 million out of 8 billion people on the planet are said to use digital assets.
Meanwhile, Maersk will have to innovate more ways to digitize its shipping process to reduce its cost of operations.