1.What were the factors that contributed to the failure of TradeLens? What people, organizations, or technology factors were responsible for these problems?

2.How is the approach being taken by GSBN different than that taken by TradeLens? Is GSBN more likely to succeed as a result? Explain your answer.

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In 2016, Maersk, a global container logistics company that operates in more than 130 countries and serves more than 300 ports worldwide, and IBM, the global IT company, embarked on an ambitious project: to determine the practicability of using blockchain technology to enhance document-sharing across the supply chain and reduce complexity for customers and suppliers. As discussed in Chapter 6, blockchain is a distributed ledger that stores a permanent and tamperproof record of transactions and shares them among a distributed network of computers. Blockchain technology is best known for providing the foundation for cryptocurrencies such as Bitcoin, but it can also be used to digitize document transfers. The shipping logistics process underlying the global supply chain is complex. The shipping process typically begins with a cargo owner initiating a booking with the company to send goods overseas. Legal documents need to be filled, submitted, and approved before a piece of cargo is allowed to enter or leave a port. The shipping paper trail could end up with hundreds or thousands of pages in documentation processed by different supply chain parties, including agencies, banks, and customs. A host of other factors, including missing documents, miscommunications, and differences in regulations among organizations and countries may further lengthen the shipping process. Maersk and IBM believed that blockchain could supply a solution to these issues. In June 2016, Maersk and IBM launched a pilot project in the form of a shipment from Kenya to Holland and followed up in February 2017 when they cooperated with a freight forwarder and a customs authority to do a live test of a blockchain-enabled shipment. Encouraged by the success of the pilot tests, in August 2018, Maersk and IBM launched a blockchain-enabled global supply chain solution called TradeLens. The TradeLens system was intended to enhance the efficiency and security of global trade, which historically has been hobbled by data trapped in organizational silos, paper-based processes, and clearance processes that are subject to fraud. TradeLens aimed to allow Maersk to gather data points to spot inefficiencies within supply chains and suggest solutions to clients. Unlike typical information system projects, TradeLens was meant not only as a solution for Maersk but as a digital revolution in the shipping industry. However, the implementation of TradeLens and the claims of its benefits to shippers and of improving productivity in general were met with skepticism. Shippers and the broader logistics industry raised questions about the cost, imminent applicability, and value of this innovation. There were also questions about the scalability of a blockchain-enabled shipping solution developed by a single liner carrier. The success of the project relied heavily on the participation of other large carriers who would act as trust anchors and run blockchain nodes on the network. Onboarding other carriers was a necessary condition for TradeLens to succeed. But Maersk and IBM struggled to find partners and initially succeeded in enticing only one other carrier, Pacific International Lines, onto the platform. Maersk, as the owner of the joint venture that operated Trade Lens, enjoyed a benefit not shared by other participants, so Maersk's rivals were understandably hesitant to use a platform that would enrich their biggest competitor. Maersk and IBM were aware of these issues during the new system's implementation, and in response, they established an operational subsidiary to manage staff on the project and ensure the independence of TradeLens from Maersk's other business units. Proponents believed that TradeLens would enable new and more efficient shipping processes to germinate, but skepticism among shippers remained, with some questioning the claim that the solution could reduce shipping times by 40 percent, and others whether the market could afford it or even needed it. Security concerns and distrust were further obstacles, rendering it difficult for Trade Lens to gain marketing traction, despite an audit to certify its compliance with the ISO 27001 family of IT security standards. To ensure that inputs from the supply chain industry. were heard, Maersk and IBM also formed the TradeLens Advisory Board to provide guidance and feedback to drive open and fair standards. Through this collaboration model, Maersk and IBM hoped to ensure that TradeLens would be a solution for the industry built through collaboration among all participants and stakeholders. By July 2019, 11 months after the introduction of TradeLens, Maersk appeared to have overcome the initial concerns from carriers and garnered more support from big players in the shipping industry, including Zim Lines, PIL, CMA CGM, MSC, Hapag Lloyd, and ONE. Hapag-Lloyd and ONE each agreed to operate a blockchain node and assume a critical role for the network by acting as trust anchors or validators. Both companies also joined the TradeLens Advisory Board, uniting with members across the supply chain to ensure the neutrality and openness in the governance of the TradeLens project. More than 100 ecosystem participants became actively involved in the project, including global ports and customs authorities, cargo owners, freight forwarders, and logistics companies. However, despite all of these efforts, in November 2022, Maersk and IBM announced that they were discontinuing Trade Lens. Maersk noted that although they had successfully developed a viable platform, it had not been able to achieve the level of industry collaboration required for the venture to succeed, and as a result, TradeLens had not been able to generate the revenue necessary to succeed as an independent business, even though, according to Maersk, it had been used to successfully track just under 70 million shipping containers and log 36 million digital shipping documents. Various commentators have weighed in on why the project failed, seeking to identify lessons to be learned. Some of the factors that have been identified as contributing to its ultimate failure are the complexity involved in blockchain technology, the internal decision making required, the necessary level of change, and how much new knowledge was needed to implement the project. The fact that the project's founders were two large multinational corporations added to the issue. Some commentators believe that smaller, more entrepreneurial firms that focus on singular applications that replace or reshape simple processes around how work gets done, products get made, or transactions are facilitated are more likely to be the source of successful innovative blockchain breakthroughs than more traditional large firms. Success may come more easily with smaller projects: ones involving fewer participants, with clear returns on investment and that don't try to transform an entire sector all at once. Indeed, this has been the approach of blockchain technology provider Cargo X, which is working with various governments, carriers, and logistics providers to standardize digital trade documents transfers using blockchain, but unlike Trade Lens, CargoX is not trying to revolutionize global shipping operations. Rather, it takes a modular approach, focusing on one aspect at a time.For instance, it began with the bill of lading (a detailed list of goods within a shipment in the form of a receipt, given by the shipper to the party that owns the goods), then moved on to advanced cargo information, based on data standards put into place by the United Nations and World Customs Organization Another factor identified by commentators was the level of risk involved in the TradeLens project. Blockchain, as a radical innovation, requires a high level of risk tolerance for innovation and adoption. Many companies in the traditional shipping industry were not prepared to participate in a project that required that level of risk. In the end, according to Forrester Research, there simply were not enough participants in the project. But the effort to use blockchain to streamline the logistics process underlying the global supply chain has not ended with the demise of Trade Lens. One such blockchain solution comes from the Global Shipping Business Network (GSBN), a Hong Kong-based blockchain consortium that includes the participation of Cosco Shipping Lines, Hapag-Lloyd, OOCL, PSA International, CMA CGM, Evergreen Marine, and Yang Ming as well as several ports, such as Cosco Shipping Ports, Hutchinson Ports, SPG Qingdao Port, and Shanghai International Port Group. GSBN is a not-for-profit data exchange platform that enables its members to share verified logistics and cargo data in a secure manner. GSBN's platform was built by CargoSmart based on Oracle Blockchain. In January 2023, GSBN transmitted the first totally electronic bill of lading for bulk cargo on its network in live pilot transaction. GSBN's chief executive officer, Bertrand en, believes the future is bright GSBN, especially since it no longer has to compete with TradeLens. He notes that GSBN is focusing on two primary tracks. The first is paperless trade: getting rid of as much of paper documentation as possible. The second is environmental, social, and governance (ESG). Chen believes that GSBN will succeed where Trade Lens failed in part because the former is a non-profit consortium, and because it is not taking what he characterizes as a "big bang" approach. Rather than focusing on how many transactions are processed, GSBN is focusing on how much value is being created for the end-user. In addition, participants in GSBN are more comfortable exchanging data because GSBN does not have a commercial incentive to encroach on the participants' business. With the shuttering of TradeLens, GSBN has become the leader in the shipping logistics blockchain space, with over 30 percent market share, based on cargo volume. In 2016, Maersk, a global container logistics company that operates in more than 130 countries and serves more than 300 ports worldwide, and IBM, the global IT company, embarked on an ambitious project: to determine the practicability of using blockchain technology to enhance document-sharing across the supply chain and reduce complexity for customers and suppliers. As discussed in Chapter 6, blockchain is a distributed ledger that stores a permanent and tamperproof record of transactions and shares them among a distributed network of computers. Blockchain technology is best known for providing the foundation for cryptocurrencies such as Bitcoin, but it can also be used to digitize document transfers. The shipping logistics process underlying the global supply chain is complex. The shipping process typically begins with a cargo owner initiating a booking with the company to send goods overseas. Legal documents need to be filled, submitted, and approved before a piece of cargo is allowed to enter or leave a port. The shipping paper trail could end up with hundreds or thousands of pages in documentation processed by different supply chain parties, including agencies, banks, and customs. A host of other factors, including missing documents, miscommunications, and differences in regulations among organizations and countries may further lengthen the shipping process. Maersk and IBM believed that blockchain could supply a solution to these issues. In June 2016, Maersk and IBM launched a pilot project in the form of a shipment from Kenya to Holland and followed up in February 2017 when they cooperated with a freight forwarder and a customs authority to do a live test of a blockchain-enabled shipment. Encouraged by the success of the pilot tests, in August 2018, Maersk and IBM launched a blockchain-enabled global supply chain solution called TradeLens. The TradeLens system was intended to enhance the efficiency and security of global trade, which historically has been hobbled by data trapped in organizational silos, paper-based processes, and clearance processes that are subject to fraud. TradeLens aimed to allow Maersk to gather data points to spot inefficiencies within supply chains and suggest solutions to clients. Unlike typical information system projects, TradeLens was meant not only as a solution for Maersk but as a digital revolution in the shipping industry. However, the implementation of TradeLens and the claims of its benefits to shippers and of improving productivity in general were met with skepticism. Shippers and the broader logistics industry raised questions about the cost, imminent applicability, and value of this innovation. There were also questions about the scalability of a blockchain-enabled shipping solution developed by a single liner carrier. The success of the project relied heavily on the participation of other large carriers who would act as trust anchors and run blockchain nodes on the network. Onboarding other carriers was a necessary condition for TradeLens to succeed. But Maersk and IBM struggled to find partners and initially succeeded in enticing only one other carrier, Pacific International Lines, onto the platform. Maersk, as the owner of the joint venture that operated Trade Lens, enjoyed a benefit not shared by other participants, so Maersk's rivals were understandably hesitant to use a platform that would enrich their biggest competitor. Maersk and IBM were aware of these issues during the new system's implementation, and in response, they established an operational subsidiary to manage staff on the project and ensure the independence of TradeLens from Maersk's other business units. Proponents believed that TradeLens would enable new and more efficient shipping processes to germinate, but skepticism among shippers remained, with some questioning the claim that the solution could reduce shipping times by 40 percent, and others whether the market could afford it or even needed it. Security concerns and distrust were further obstacles, rendering it difficult for Trade Lens to gain marketing traction, despite an audit to certify its compliance with the ISO 27001 family of IT security standards. To ensure that inputs from the supply chain industry. were heard, Maersk and IBM also formed the TradeLens Advisory Board to provide guidance and feedback to drive open and fair standards. Through this collaboration model, Maersk and IBM hoped to ensure that TradeLens would be a solution for the industry built through collaboration among all participants and stakeholders. By July 2019, 11 months after the introduction of TradeLens, Maersk appeared to have overcome the initial concerns from carriers and garnered more support from big players in the shipping industry, including Zim Lines, PIL, CMA CGM, MSC, Hapag Lloyd, and ONE. Hapag-Lloyd and ONE each agreed to operate a blockchain node and assume a critical role for the network by acting as trust anchors or validators. Both companies also joined the TradeLens Advisory Board, uniting with members across the supply chain to ensure the neutrality and openness in the governance of the TradeLens project. More than 100 ecosystem participants became actively involved in the project, including global ports and customs authorities, cargo owners, freight forwarders, and logistics companies. However, despite all of these efforts, in November 2022, Maersk and IBM announced that they were discontinuing Trade Lens. Maersk noted that although they had successfully developed a viable platform, it had not been able to achieve the level of industry collaboration required for the venture to succeed, and as a result, TradeLens had not been able to generate the revenue necessary to succeed as an independent business, even though, according to Maersk, it had been used to successfully track just under 70 million shipping containers and log 36 million digital shipping documents. Various commentators have weighed in on why the project failed, seeking to identify lessons to be learned. Some of the factors that have been identified as contributing to its ultimate failure are the complexity involved in blockchain technology, the internal decision making required, the necessary level of change, and how much new knowledge was needed to implement the project. The fact that the project's founders were two large multinational corporations added to the issue. Some commentators believe that smaller, more entrepreneurial firms that focus on singular applications that replace or reshape simple processes around how work gets done, products get made, or transactions are facilitated are more likely to be the source of successful innovative blockchain breakthroughs than more traditional large firms. Success may come more easily with smaller projects: ones involving fewer participants, with clear returns on investment and that don't try to transform an entire sector all at once. Indeed, this has been the approach of blockchain technology provider Cargo X, which is working with various governments, carriers, and logistics providers to standardize digital trade documents transfers using blockchain, but unlike Trade Lens, CargoX is not trying to revolutionize global shipping operations. Rather, it takes a modular approach, focusing on one aspect at a time.For instance, it began with the bill of lading (a detailed list of goods within a shipment in the form of a receipt, given by the shipper to the party that owns the goods), then moved on to advanced cargo information, based on data standards put into place by the United Nations and World Customs Organization Another factor identified by commentators was the level of risk involved in the TradeLens project. Blockchain, as a radical innovation, requires a high level of risk tolerance for innovation and adoption. Many companies in the traditional shipping industry were not prepared to participate in a project that required that level of risk. In the end, according to Forrester Research, there simply were not enough participants in the project. But the effort to use blockchain to streamline the logistics process underlying the global supply chain has not ended with the demise of Trade Lens. One such blockchain solution comes from the Global Shipping Business Network (GSBN), a Hong Kong-based blockchain consortium that includes the participation of Cosco Shipping Lines, Hapag-Lloyd, OOCL, PSA International, CMA CGM, Evergreen Marine, and Yang Ming as well as several ports, such as Cosco Shipping Ports, Hutchinson Ports, SPG Qingdao Port, and Shanghai International Port Group. GSBN is a not-for-profit data exchange platform that enables its members to share verified logistics and cargo data in a secure manner. GSBN's platform was built by CargoSmart based on Oracle Blockchain. In January 2023, GSBN transmitted the first totally electronic bill of lading for bulk cargo on its network in live pilot transaction. GSBN's chief executive officer, Bertrand en, believes the future is bright GSBN, especially since it no longer has to compete with TradeLens. He notes that GSBN is focusing on two primary tracks. The first is paperless trade: getting rid of as much of paper documentation as possible. The second is environmental, social, and governance (ESG). Chen believes that GSBN will succeed where Trade Lens failed in part because the former is a non-profit consortium, and because it is not taking what he characterizes as a "big bang" approach. Rather than focusing on how many transactions are processed, GSBN is focusing on how much value is being created for the end-user. In addition, participants in GSBN are more comfortable exchanging data because GSBN does not have a commercial incentive to encroach on the participants' business. With the shuttering of TradeLens, GSBN has become the leader in the shipping logistics blockchain space, with over 30 percent market share, based on cargo volume.

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1 Factors contributing to the failure of TradeLens a Lack of Adoption One of the main factors that can contribute to the failure of any platform or initiative is the lack of adoption by key stakeholde... View the full answer