Home / Uncategorized / Tech, not consolidation, will drive container shipping change. – International commentary

 

As container shipping has consolidated from 18 east-west carriers down to 11 during the past two years, it is easy to say the industry is experiencing an inflection point and will look very different in the future. However Journal of Commerce suggests that it is technology, reports such as block chain, that will drive behaviour change. Although it is yet to happen and may take years to implement, for the first time it is possible to envision a path to significant reductions in the staggering costs associated with global trade. That is because the concept of distributed ledgers (block chain) can create the necessary level of trust among the dozens of individual parties that must interact as trade flows from origin to destination. It allows that interaction to occur with a collaborative Cloud-based environment not owned or controlled by any central party. A decentralized environment, where all parties involved in the movement of a container could interact, has been both the perfect solution and completely unachievable until now. None of the technology developed and deployed over decades has created the collaborative environment the industry requires above all other solutions. The potential elimination of cost is so great (it has been estimated that documentation costs alone amount to 20 percent of the costs of actual shipping) that despite the lack of progress there remains “an insatiable hunger to see such a system implemented if it can be done right, to get to the point where we’re all using the same platform.” The requirement for the common platform: neutrality Getting it done right is the challenge, and the key to that is neutrality. A key question is whether the holy grail system will be the one to be created by a JV of Maersk and IBM, which in January announced plans to create a “global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem.” Without question, achieving neutrality and resulting buy-in will be the difference between the industry being able to seize this unique opportunity or not. The prize is so big that it is imperative that individual carriers see participation in a common platform as non-competitive. If just a narrow slice of the industry joins the environment, they may succeed in reducing some costs, but the overall result will be elimination of only a fraction of the costs that would be possible through universal adoption by carriers, forwarders, shippers, ports, and government agencies. That is why this moment is so critical. How many times has it been said that nothing has changed since the introduction of the container in the late 1950s? It is time that the industry that revolutionized global trade more than 50 years ago do it all over again.

 
 
 
 
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