Consultant Insight: Blockchain and the air cargo market — can it work?

Ocean shipping line Maersk and technology group IBM’s announcement to close blockchain-enabled shipping platform TradeLens came as no surprise to the industry and raised questions about the use of blockchain in supply chains. “TradeLens was founded on the bold vision to make a leap in global supply chain digitization as an open and neutral industry platform,” Rotem Hershko, senior vice president and head of business platforms at A.P. Moller-Maersk, said in a statement. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] “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,” Hershko added. A number of industry experts described blockchain as a solution waiting for a problem, and this is what appears to have happened to TradeLens; blockchain was not the right solution. Several weighed in on LinkedIn, including: Brian Glick, founder and chief executive at Chain.io “Being an early adopter of a tech comes with huge risks and potentially huge rewards...It can seem flippant to say, ‘This is what innovation looks like,’ but in some respects, it’s true. Moonshot projects don’t always reach the moon, but they do drive all of us to think big. Jess Hurwitz, founder, CEO and chief strategist at dX9 Global : “Having been involved in many successful blockchain initiatives, this is not surprising to see. Blockchain has tremendous value when applied to a good revenue-generating business model and where the requirements deem blockchain to be the right technology to engage. Business first, technology second, and never the other way around.” John Monarch, supply chain lead at the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) : “Blockchain is and will be a powerful tool for the freight industry. But centralized solutions that are not technical standards or truly open source will not be.” Blockchain and air cargo While the COVID-19 pandemic sidelined many planned projects related to blockchain, there have been several solutions and pilots in the air market. For example, at Air Cargo World’s Tech Summit earlier this year, Teleport Chief Executive Pete Chareonwongsak told attendees that Malaysian-based Teleport, the logistics venture of low-cost airline Capital A, aims to use blockchain to connect air cargo stakeholders and reduce waste. “Blockchain is associated with many other things at the moment — cryptocurrency crashes, et cetera,” C hare onwongsak said . “But I think in our case, [the question was] how do we get a lot of people together to trust each other?” Meanwhile, the International Federation of Freight Forwarders Associations (FIATA) in September launched its paperless bill of lading (eFBL) in the Asia Pacific. The documents are secure, paperless and available through transportation management systems (TMS) and other software tools. Pilot testing A couple of notable pilots utilizing blockchain occurred this year, including a flight between Madrid and Montevideo involving Air Europa, DB Schenker, Usyncro, World Flight Services, Latin America Cargo City, the International Air Transport Association (IATA) and the Spanish Tax Agency. This was the first air cargo operation between Europe and Latin America managed digitally, according to participants. Blockchain technology made it possible to centralize and synchronize information with transparency and security, ensuring real-time traceability of the shipment. Meanwhile, CargoX, a technology company specializing in the digital transfer of trade documents, partnered with the Egyptian government in June to provide advanced Blockchain Document Transfer (BDT) services as a core component of Egypt’s Advance Cargo Information (ACI) system implementation for air cargo. The ACI system aims to provide business intelligence and governance mechanisms to the government before cargo loading from ports of export, facilitating cargo clearance procedures and creating transparency and audit trails for cargo movements within a paperless ecosystem by digitizing shipment documents transfer using CargoX BDT services. The ACI system is considered a core component of Egypt’s national single-window platform for international trade. As supply chains embrace technologies to improve transparency and resilience, air cargo stakeholders will weigh the benefits of blockchain to determine if it is indeed the right tool for a solution or if an alternative is the better approach.

Consultant Insight: Blockchain and the air cargo market — can it work?

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