The Hurdles of Logistics Technology Implementation

March 29, 2023

Successful logistics technology projects require a long-term commitment—not just a captivating vision

In 2016, Maersk took the industry by surprise. It boldly announced the joint development of TradeLens using blockchain. This highly-touted ocean shipping IT project promised to make international trade more secure and efficient.

TradeLens was expected to be a game-changing innovation.

Then, in the last week of November 2022, Maersk again took the industry by surprise. This time, it matter-of-factly announced that it planned to cancel the TradeLens project in the first quarter of 2023.

It was walking away from one of the industry’s most innovative IT undertakings.

TradeLens entailed the use of blockchain technology to give customers greater cargo visibility while reducing the paperwork required to clear customs. The employment of TradeLens would have saved both time and money. It was a first step, a giant first step, in simplifying world trade.

Both Maersk and IBM acknowledged failure, if not directly in word but in deed. That’s a courageous admission.

This failed undertaking imparts valuable lessons for any company, large or small. Let’s look at those lessons and how we can benefit from them.

Grand Vision vs. Harsh Reality.

First, this was a huge undertaking with a gargantuan vision. Maersk and IBM can’t be faulted for their audacious vision. The logistics industry needs more bold innovation.

However, Maersk’s and IBM’s approach matched their vision. In hindsight, they should have tempered their project’s execution of its goals, objectives, and milestones. Maersk and IBM should have considered more deeply the realities of the hurdles they had to overcome.

Had they done so, the project might have succeeded.

In the end, Maersk deemed TradeLens a cost rather than a benefit. In the end, Maersk considered it to be non-commercially viable.

But other hurdles impeded a successful implementation.

Sustained Leadership Support.

Another hurdle was a lack of sustained leadership support. For a project of this size and scope, leadership must explicitly commit themselves from start to finish. That entails understanding the realities of obstacles, delays, and setbacks inherent in any IT implementation.

Here, after some success, it appears leadership lacked the commitment to stay the course. Focusing on short-term gain detracted from the promise of long-term benefits. In today’s competitive environment, it is understandable leadership would have reservations to proceed.

Perhaps in paring back expectations by planning for smaller gains stretched out over time, this project may have been commercially viable. After all, Maersk has to keep its eye on profits and its investors. Balancing that is challenging enough without attempting an industry-changing IT project.

Walmart, for example, is treading slowly in a similar enterprise-level Blockchain project. You’re probably familiar with Walmart’s intent to track groceries from farm to grocery store.

Walmart’s project started with tracing leafy greens from original source to individual stores. Now, four years later, progress is slow and unimpressive. Walmart has added only one additional item to its project: green bell peppers.

Obviously, Walmart’s leadership is taking a more conservative approach than Maersk’s did. Maybe it’s too conservative. Or it highlights the reality of the complexity and other challenges involved in harnessing blockchain technology.

Size of Stakeholder Community.

Matching the enormous scope of the project was the size of the stakeholder community. That, too, was enormous.

TradeLens included a host of disparate stakeholders that had to connect with one another to make TradeLens a success. They included commercial, national, and international governmental organizations.

  • Shippers
  • Freight forwarders
  • Ports and terminals
  • Ocean carriers
  • Intermodal operators
  • Government authorities
  • Customs brokers

Getting these individual stakeholders on a single page is a herculean task for any organization, even with a partnership between Maersk and IBM.

Complexity and Stakeholder Constraints.

One of the biggest drawbacks of implementing TradeLens was stakeholder constraints. In implementing TradeLens, stakeholders had to cooperate to overcome many inherent complexities.

For example, customs laws are different in every country. Complicating seamless trade even more, ports in the same country may have different regional regulations. Now, expanding TradeLens to more than one country further complicated legal and compliance issues.

The lack of standardization of international trade law is a formidable task at best. If you think about the coordination and collaboration required for intermodal operations alone, you can better appreciate Maersk’s and IBM’s challenges.

Their challenge was complex and complicated as a technical solution. Now add the stakeholder constraints they had to deal with, and the hurdles come into sharp focus. This ocean shipping technology solution faced strong headwinds at the outset.

The lesson learned here is to assess the complexity of your IT project in depth before launching an IT project.

Innovation through technology implementation isn’t going away.

As we can see from Maersk’s and IBM’s example,IT implementations are anything butguaranteed.A takeaway from this project is that the lure of the benefits must not outweigh the reality of the long-term nature of bold innovative IT projects.

That goes double for attempting to exploit an industry-changing technology like Blockchain. That said, this case should not deter you from the benefits today’s technologies— existing and emerging—have to offer.

Just as logistics and supply chain management are in a new era, so too is technology. We might even be in a golden era of technological development and adoption.

The main lesson here is that the success in adopting a technology solution lies in its implementation. There are many factors to consider. You must understand them all and hunker down for the long-term, no matter what happens.

At American Global Logistics,  we believe the future of logistics depends on innovation through technology. We are no strangers to the realities of innovation projects.

As a 3PL, we can help you innovate your supply chain. We take a realistic view that balances all the costs and benefits. In addition, we know how to manage your supply chain while avoiding predictable disruptions.

Contact us if you want to propel your business to the next level.

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