Friday, August 25, 2017

Shipping: "Amazon vs Maersk: The clash of titans shaking the container industry"

From Platts' The Barrel blog, Aug. 18:
Approximately 90% of the world’s trade travels by sea and one would expect the industry’s supply chain to be the height of modernity by adopting disruptive technology and strategies. However, this could not be further from the truth. While online trading platforms are under development, the traditionalism of the industry prevails with various parties involved in each voyage, typically communicating via trade managers.

In this archaic set-up, someone with enough muscle and innovative ideas could be like a tsunami, rolling through and disrupting the traditional container shipping movement.

Enter Amazon. This biggest online retailer in the world is no longer just that. Amazon obtained the title of a non-vessel operating common carrier in early 2016 for cargo shipments between China and the US. This cemented their role as a complete logistics company and freight forwarder as they already are in aviation, trucking and manufacturing — the complete supply chain.

Manufacturing is new step for Amazon and they won a patent earlier this year to develop a system to rapidly create clothing and other products after a customer order is placed. This forms a cheap and simple method for Chinese exporters as Amazon have effectively wiped out the middle man, acting as a shipbroker for itself and on behalf of smaller companies.

These developments would allow Amazon to have complete control over certain areas of their own supply chain. With Amazon taking away a chunk of the market on which container companies thrived, shipping companies should be wary of Amazon’s continued expansion across the supply chain.

Of course,  the container industry has its own major players, who may not stand idly by while Amazon rips up the rule book.

Container giant AP Moller Maersk is leading the way for other container players on how to stay afloat in the storms buffeting the logistics chain.

The container market has been hit hard by financial woes over the last decade and is crying out for cost-cutting schemes. In response, Maersk is in the process of developing a blockchain initiative in partnership with IBM. This will be the equivalent of unclogging a smoker’s arteries as information will flow smoothly, unhampered by the convoluted paper trail previously involved in a single voyage.

In 2014 IBM and Maersk’s joint research demonstrated that a simple voyage of avocados and roses from Kenya to the Netherlands involved an extensive chain of almost 30 personnel and companies, and not least more than 200 interactions between these parties. The sheer volume of transactions for every cargo exposes the supply chain to security risks. Blockchain’s Hyperledger used by Maersk and IBM is a solution to that. It is a database across numerous computers and it guarantees transactions’ validity, ensuring they cannot be faked in the future. This way Hyperledger adds privacy to transactions whilst maintaining the immutability....MORE
HT: ZeroHedge

If interested see also:
Aug. 22 
"TEU Tokens and Blockchain Could Shape the Future of Container Shipping"
June 15 
Containers and globalisation: Estimating the cost structure of maritime shipping 
March 14
Shipping: "The True Implications of the Technology Revolution"
Feb. 15
Shipping: Following Maersk,"Now CMA CGM signs with Alibaba for online booking of container space"
Feb. 13 
"2017: The Year For Shipping Companies?" 
Feb. 6 
Shipping: A Warning To Freight Forwarders, The Good Times Are Over
Jan. 27
Shipping: "Amazon Enters Trillion Dollar Ocean Freight Business" (AMZN)
Jan. 5
Shipping: Maersk, Alibaba Team Up To Offer Space On Container Ships