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April 2 2018

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46 The Journal of Commerce | April 2 2018 Trading Places Peter Tirschwell HOW IS ONE to make sense of the bar- rage of blockchain announcements already this year, and the feeling that these may be the opening chess moves in a profound game that could reshape how the industry works in the coming years? On Jan. 16 it was Maersk and IBM announcing formation of a joint ven- ture company to simplify visibility and documentation via blockchain. The announcement of an initial coin offering by the Global Shared Container Platform came on Feb. 28, aiming to create a global pool of containers, real-time tracking, and dwell time visibility. On March 14, a consortium of AB InBev, Accenture, APL, Kuehne + Nagel, and a Europe- an customs organization said it test- ed a blockchain solution to eliminate printed shipping documents. And on March 15, Hong Kong-based 300cubits said it successfully com- pleted the first trial shipment in its TEU token smart contract on the Ethereum blockchain. There were likely others as well. This flurry of announcements, at a time when many people are still struggling to understand blockchain itself, raises more questions than it answers. Among them: If blockchain by its nature is supposed to be decentralized and neutral (like Bit- coin, famously "owned by everyone and no one"), are we seeing the emergence of the antithesis — that is, blockchains owned and controlled by a profit-making party intent on charging fees to use it? Will the block- chain ecosystem in logistics be made up of competing blockchains unable or unwilling to interact with each other? Alternatively, will the multiple emerging blockchains become inter- operable, able to interact with each other in a compatible ecosystem? Or will one dominant blockchain emerge from the pack and, like Microsoft Windows, make its owners spectacu- larly rich in the process? "The way I see it, there are two ways this could evolve. The first way is one of these blockchain initia- tives will gather a lot of momen- tum and become the standard for the industry that everyone must follow," said Gordon Downes, CEO of the New York Shipping Exchange, or NYSHEX, which recently tested its container slot contract on the Hyperledger open source block- chain. "The alternative way might be that different blockchain initiatives become interoperable, meaning the use cases on the blockchain can be realized regardless of which underly- ing blockchain is being used." Accepting that multiple block- chain initiatives are being created almost by the day, a consensus view of sources contacted by The Journal of Commerce recently said they need to be interoperable for there to be any hope that major benefits would eventually accrue to the industry. "In my view, there is a strong need for the different blockchains emerging in the shipping industry to be interoperable. It would be detrimental for the shipping industry if the different factions and initiatives compete head-on trying to make their specific blockchain technology choice the de-facto standard for the indus- try," said Peter Ludvigsen, CEO and founder of Blockshipping ApS, creator of the GSCP platform. "This would substantially delay benefits realiza- tion for the carriers and the custom- ers and the industry as a whole." "Siloed solutions will not work," said Brian Laung Aoaeh, certified financial analyst, a partner with Particle Ventures in New York and founder of The New York Supply Chain Meetup. "If people go down the path of developing their own solutions, I think they have to ensure that those solutions can talk to one another, and maybe that is how it works." That's why, he said, "my guess is that we'll ultimately gravitate toward centralized blockchain appli- cations and away from decentralized blockchain applications. The reason is simple: A centralized design is generally preferred when there's a need for a high degree of consistency within the system or network." Others agree. "This is not going to be a Betamax versus VHS type of outcome. You are going to have by necessity some kind of interopera- bility of standards and data, and not too far away from now," said Fauad Shariff, co-founder and CEO of the NVO-focused startup CoLoadX. "Blockchain is looking more and more like infrastructure, so can you charge a toll for the use of your blockchain?" Shariff said. "It's debatable when there is another one that does the same thing at the same speed, so it's much easier to collaborate and then build apps and extensions off of that, and that is where we're probably going to head." Ludvigsen said one factor that shouldn't be an obstacle to interop- erability is trust. The core of block- chain technology is defined by encryption and agreed-upon stan- dards that should overcome any trust issues. "The use of blockchain technology enables global container carriers who are fierce competitors and who do not trust each other to use a system where the trust is built into the system," he said. According to Otto Schacht, exec- utive vice president of sea logistics at Kuehne + Nagel, the world's largest ocean freight forwarder: "The still-open question is what such a model might look like, and to what extent it may change the roles of the different players in the market. Currently, the launch of the first prototypes across different industries is about to reveal the real world potentials and limitations of blockchains." JOC email: twitter: @petertirschwell Which way will blockchain go? "This is not going to be a Betamax versus VHS type of outcome."

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