for someones

9 – 5 1 8 – 0 8 9

R E V : J U L Y 1 9 , 2 0 1 8

Professor Rajiv Lal and Research Associate Scott Johnson prepared this case. It was reviewed and approved before publication by a company
designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed
solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or
ineffective management.

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R A J I V L A L

S C O T T J O H N S O N

Maersk: Betting on Blockchain

This is a crucial step in the digital transformation, not just of the container industry, but of global trade in its
entirety.

— Vincent Clerc, Chief Commercial Officer at Maersk

Mike White, head of global trade digitization at Maersk, strolled through the port of Rotterdam in
the Netherlands. It was March 2018, and he was visiting the port to check in on the status of a new
project. White took in the chaotic scene around him. Large cranes hurriedly unloaded shipping
containers off of massive cargo ships. The containers were packed to the brim with all kinds of goods,
everything from flowers to flat-screen TVs. Customs authorities shuffled through thick stacks of papers
as they inspected the incoming cargo. White noticed a long line of trucks idling at the port’s entrance
waiting to haul the goods to destinations across Europe. At the far end of the port, tugboats towed the
Madison Maersk into the terminal. The vessel was one of the biggest container ships in the world. The
ship was longer than three football fields and capable of hauling more than 18,000 standard shipping
containers, the equivalent of 1,200 Boeing 747s (see Exhibit 1).1

Watching the flurry of activity reminded White of the litany of problems in global trade. The
industry was rife with inefficient paper-based processes. Companies had little visibility into the status
of goods as they moved through the supply chain. Communication between firms was often
complicated and expensive. The administrative costs involved with transporting a shipping container
were shockingly high. Maersk was the largest container shipping company in the world. The
company’s senior management had selected White to run a new project they hoped would address the
difficulties in the industry. Maersk had partnered with IBM on a new global trade digitization platform
that was intended to act a utility for the industry and lower the barriers to trade.

Blockchain, a technology associated primarily with Bitcoin and other cryptocurrencies, would
power part of the platform. The team at Maersk felt that blockchain could help deliver clarity to an
often confusing supply chain. Blockchain would act as a distributed ledger, giving all the players in
global trade access to a single source of truth. Maersk and IBM decided to launch this new platform
as part of an independent joint venture. Once regulatory approvals went through in a few months,
White would become the new CEO of the firm. He wondered if the joint venture was the right
organization to operate this new blockchain platform for global trade. What challenges would White
face along the way?

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Background on Maersk
In 1904, A.P. Møller and his father Peter Maersk Møller, collected enough money to purchase a used

steamer in Denmark.2 They named their company A.P. Moller Maersk (Maersk). Over time, the
company expanded its fleet.3 Maersk’s original operations centered on tramp trade, which involved
ships that had no fixed schedule and moved cargo on an on-demand basis.4 5 Eventually, the firm
moved into liner service which used vessels traveling on established timetables and routes. 6 In the
early 1960s, Maersk moved into oil and gas exploration and founded Maersk Oil. 7 Maersk’s energy
division would ultimately also include Maersk Drilling, Maersk Supply Service, and Maersk Tankers. 8
During this period, Maersk began heavily using the standard shipping container. The container format
substantially reduced the expense for transporting goods.9 In the 1960-70s Maersk expanded its
operations into a wide range of business including an airline, IT services company, a chain of
supermarkets, and medical device manufacturing. Maersk would eventually divest itself of these units
due to a decline in the shipping industry in the 2000s.10

Although the energy division made up 23% of company revenue in 2016, Maersk decided to refocus
solely on its shipping and logistics division. 11 In 2017, the company sold off Maersk Oil and Maersk
Tankers for over $8 billion. 12 Maersk intended to divest itself of the rest of its energy division in the
near future. Headquartered in Copenhagen, Maersk operated in more than 130 countries and had over
88,000 employees.13 The company brought in almost $31 billion in annual revenue in 2017.14

After Maersk divested its energy division, five business units remained within the company (see
Exhibit 2 for a breakdown of Maersk’s revenue). The most prominent business unit was Maersk Line,
the biggest container shipping firm on the planet. The company had an industry leading 16% market
share in 2016. In April 2017, Maersk Line grew its market share to over 19% by purchasing rival
Hamburg Sud for $4 billion.15 16 Maersk Line delivered almost 80% of Maersk’s overall revenue.17 The
company operated more than 600 vessels while shipping 12 million containers a year. Almost 60,000
customers entrusted Maersk Line to deliver their cargo to almost 350 ports across the globe.18

Maersk’s APM Terminals unit operated 74 ports and terminals around the world, including Los
Angeles, Shanghai, Rotterdam, and Miami.19 20 APM Terminals also offered inland services, which
consisted of transporting and handling goods between inland areas and ports. 21 Maersk operated
Damco, a freight forwarder that also provided additional services including customs brokerage and
supply chain management.22 Another unit within Maersk was Maersk Container Industry, which
manufactured shipping containers. Maersk’s smallest unit was Svitzer, a firm that provided towing,
emergency response and salvage services to the maritime industry.

Container Shipping Industry
The modern container industry had its origins from a brainstorm by a businessman from North

Carolina. He purchased a steamship firm and placed truck trailers filled with cargo on the company’s
ships. The trailer could be taken right off of the ship without needing to be unpacked. That concept
brought about the shipping container, which could transport goods and be easily transferred between
multiple modes of transportation such as trains, ships, and trucks during a trip (see Exhibit 3).23 The
shipping industry had standardized container sizes, with 20 feet and 40 feet as the most frequently
used sizes. Twenty-foot containers were also termed 20-foot equivalent units (TEU), which was the
industry measurement for cargo volume or fleet capability. 24 One estimate indicated that over 200
million TEUs were shipped in 2017.25 Maritime shipping accounted for 90% of global trade, and the
container industry was responsible for most of that traffic.26,27 Using a container vessel was the best

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Maersk: Betting on Blockchain 518-089

3

way to move goods between distant locations in a cost-effective manner. 28 Container transportation
offered better efficiency than other transportation options since vessels could haul more containers. 29

In 2016, the container fleet industry brought in $135 billion in revenue. This figure was a significant
drop from 2012 when industry firms made over $180 billion.30 The chief reason for the decline in industry
revenues was falling freight prices. One source indicated that the price to ship a container had fallen more
than 50% from 2012 to 2016.31 A combination of a poor global economy and a surplus of ships caused the
reduced freight rates.32 In 2016, the 20 largest shipping lines by capacity lost a combined $5 billion.33
Despite these difficulties, experts forecast that the industry’s growth rate would improve after 2018.

The container shipping market was undergoing a period of consolidation. The top five firms in the
field controlled 32% of the market in 2000. By 2018, those companies represented 61% of the industry
(see Exhibit 4). Additionally, firms in the container industry had formed a series of alliances in recent
years. The container shipping market featured three main alliances that represented about 80% of the
market. Maersk had partnered with competing shipping liner MSC in 2014 to create an alliance referred
to in the industry as 2M. These alliances allowed multiple carriers to split the capacity on a vessel,
which ensured favorable utilization of the ship’s capability and lowered the operational expenditures
for the firms involved. 34

Large firms with operations around the globe represented about 0.5% of the overall customer base for
the container industry. However, those companies were responsible for about 50% of all container traffic.
These massive firms typically did not give a single shipping line more than 40% of its overall cargo. Large
companies chose to distribute its shipments in this manner to ensure that no single shipping line had too
much control over its supply chains. By working with multiple shipping lines, bigger firms gave
themselves more transportation options and created price competition between the lines.35

Other than paper documentation, companies in the shipping industry transferred a great deal of
information through electronic data interchange (EDI), a technology that had been in use for 60 years.36
For instance, a shipping line would use EDI to transmit a manifest to customs. 37 The team at Maersk
estimated that EDI covered roughly half of the volume in the container industry. Marie Wieck, general
manager of IBM Blockchain, explained the difficulty with EDI solutions, “the document-based
messages in an EDI system are exchanged with the participants immediately before and immediately
after you. So they tend to be point-to-point, and they tend to be linear. In the real world, these are
networks with multiple participants involved at different points in that chain.” She added, “The end-
to-end transparency for me to be able to predict when your mainframe computer will arrive at your
loading dock in New York City after being manufactured in France requires transparency not just to
the last point of call but the entire chain.” Additionally, the EDI messages were sent out in a batch
format which meant that the information was not transmitted in real-time.

Journey of a Shipment

Shipping goods internationally with container ships was a complicated process. For example,
transporting a container of flowers from Kenya to the Netherlands included many different parties over
the course of the journey. The shipper, which was the company that owned the flowers, contracted with
a freight forwarder to facilitate the movement of the flowers to Europe. That firm functioned as an
intermediary between the shipper and the assorted players participating in the supply chain such as
customs authorities and shipping lines. Once transportation details were settled, a trucking company
took the flowers from the farm and drove them to a warehouse operated by the freight forwarder. At the
warehouse, the freight forwarder placed the flowers inside a shipping container. One shipping container
might contain orders from multiple customers. The freight forwarder would then transfer the container

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4

to the port in Kenya. The terminal operator of the port in Kenya then loaded the container with the flowers
onto a container vessel operated by a shipping line like Maersk. The shipping line transported the flowers,
along with thousands of other containers, to the port in the Netherlands.38

Once the ship docked in the Netherlands, huge cranes unloaded the shipping containers. While the
goods were in port, customs authorities reviewed documentation on each container as well as the
goods inside. Customs officials worked to ensure no improper goods entered the country such as illegal
materials or invasive species. In certain circumstances, customs workers chose to inspect specific
containers thoroughly. After the container with the flowers cleared customs, dockworkers placed the
container onto a back of a truck. A Dutch trucking company hauled the container to a distribution
center. At that point, workers reopened the container and divided up the various goods inside. Once
separated, another trucking firm delivered the flowers to their final destination in the Netherlands.
Each of these portions of the journey had numerous components (see Exhibit 5 for a more detailed
breakdown of the steps involved in transporting a shipping container). For a shipment of this nature,
a copious amount of documentation was required (see Exhibit 6).39

Challenges in the Shipping Industry
In 2014, Maersk and IBM started working together investigating the effect that paperwork-related

processes had on supply chains. The companies wanted to examine if technology could help solve
some of the issues that afflicted global trade. White observed, “A vast amount of resources is wasted
due to inefficient and error-prone manual processes.” 40 “The container disrupted the transportation of
goods about 50 years ago. By and large, the documentation and information processes around the
transport of goods has not been disrupted and still work like they did before the container,” said
Vincent Clerc, chief commercial officer at Maersk. Clerc continued, “The industry kept relying heavily
on physical documents, papers, and stamps. The reason that happened was that compared to a lot of
technology that was available in the past, it was actually the safest way to do business. It was less
subject to fraud.” Despite the best efforts of industry firms, fraud was still a major issue. One source
calculated that the cost of maritime fraud was $600 billion a year.41 Wieck noted that, “many shipping
supply chains are bogged down by a morass of paperwork shuffled between a glut of intermediaries.” 42
The cost of all of that documentation could be as high as 20% of the overall cost of the physical
transportation. 43

Maersk and IBM conducted a series of tests which tracked the shipment of a number of different
goods across multiple trade lanes. The companies wanted to get a more granular understanding of all
the touchpoints involved in the transfer of goods and the documents needed for those journeys. “It
wasn’t too difficult to assess that there were inefficiencies in global supply chains. What we learned is
that there were issues even where there was robust information. People had problems in many places
throughout the supply chain. Many times the information was available at origin, but not at
destination,” said White. He continued, “There were times when cargo was delayed even though the
documentation was available. It just wasn’t in the right hands. We didn’t understand the degree to
which that could be very commonplace.”

Wieck pointed out that, “Shippers have real challenges in predictability because things go dark,
particularly as they go through customs. You know when a shipment arrives in a port, but you don’t
know when it is going to make it out. There is very little transparency in that process today.” Wieck
observed that many processes in the supply chain were people-based. “Today getting visibility on the
status of shipment clearance through a specific country’s customs authority still leverages expeditors
who rely on personal connections, emails, phone calls, etc.”

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5

Daniel Wilson, director of business development at Maersk Line, recalled the complicated journey of
a container they tracked, “It was a shipment from Europe to the US. Keep in mind, these are highly
developed countries with highly developed supply chains. The container arrived at the port, but the port
wouldn’t let in the container because customs needed more documentation. The customer finally found
out about it and submitted the documentation.” He continued, “The container was let into the port two
days later and it had missed its scheduled ship. The carrier didn’t know that the container had missed
the ship and it wasn’t until a day later that they rebooked it on another vessel. It arrived in the US, and
all of its documentation was done for the first ship, and so it wasn’t allowed into the country right away.
The shipment should have taken five weeks but ended up taking nine weeks.” These types of delays were
commonplace in the shipping business. The industry only delivered on-time 64% of the time.44

The teams at Maersk and IBM found more examples of inefficiency in global supply chains. A single
shipment of avocados from Kenya to the Netherlands required almost 30 people or organizations to
complete its journey. That shipment generated over 200 separate documents, which resulted in a four-inch
pile of paper.45 On another shipment, Maersk and IBM found that the goods spent more time in ports that
on the ocean. These tests convinced Maersk and IBM that, “inconsistent information across organizational
boundaries and ‘blind spots’ throughout the supply chain hindered the efficient flow of goods.”46 Maersk
employees noted that a study by World Economic Forum indicated that global trade could increase by 15%
and worldwide GDP could rise by 5%, if the barriers in the global supply chain were reduced.47 These
barriers included difficulties in border administration and the sharing of information.48

Blockchain

As the teams at Maersk and IBM began to think about how to solve the problems in global trade,
they evaluated blockchain as a technological solution. One publication remarked on blockchain, “No
term at present is more hyped, and more poorly understood.” 49 “At its heart, blockchain simply refers
to a bookkeeping method that chains together entries so that they are very difficult to modify later. It
provides a way for large groups of unrelated companies to jointly keep a secure and reliable record of
their transaction,” wrote The New York Times.50 Blockchain functioned as an immutable database where
all parties had access to every entry. One newspaper likened blockchain to “A universal ledger that is
visible to everyone.”51 The technology linked all transactions to the transactions that occurred
previously. This architecture made it difficult to tamper with an entry after someone added it to the
database. One IBM employee equated blockchain to writing the crossword in ink instead of a pencil.
Blockchain also employed advanced cryptography to ensure the security of transactions.

Blockchain first gained popularity as the technology behind cryptocurrencies like Bitcoin, which
began in 2009.52 Cryptocurrencies were virtual tokens and differed from traditional currencies, which
were aligned with specific nations. With Bitcoin, any participant could use it for transactions and did
not need an intermediary, such a bank, to facilitate those transactions. 53 Fortune Magazine noted, “Even
if the participants don’t trust each other, they can rely on the shared ledger they create through the
transactional dance of their software. You don’t need honor among thieves—you need a blockchain.” 54
Bitcoin did not require users to identify themselves. Although transactions were logged and shared
publically, those transactions were only associated with an electronic address. 55 At the beginning of
2017, the value of a single bitcoin was under $1,000. By mid-December of that year, Bitcoin’s price had
skyrocketed to over $19,000.56 This gigantic increase led many in the financial sector to label
cryptocurrency a massive bubble.57, 58

Maersk and IBM became interested in blockchain for reasons beyond cryptocurrency. In 2014, IBM
employees started working on a small blockchain project. The initiative was about to be shut down

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6

when the researchers illustrated to their bosses that blockchain, “Was about more than just a
currency—it was a new way of tracking shipments and transactions in supply chains of all kinds, from
food to prescription drugs to diamonds. Because all the participants would be keeping their own live
version of all the data, without a central authority, they could immediately see everything that was
going on and trust that no else had tampered with it.”59 IBM decided to invest more resources in
blockchain. By 2017, a research firm had named IBM as the top blockchain technology leader, ahead of
Microsoft and Accenture. 60

IBM’s solution allowed for the creation of permissioned blockchains, “where all the participants are
known and have permission to participate.” Wieck explained that with a permission blockchain,
“People know who they are doing business with. It is not a public network where everyone is
anonymous. The IBM platform has the construct of a channel. It’s like a CB radio. If you are on channel
13, you can’t hear what is on channel 12. You can set up channel 12 for Maersk and channel 13 for MSC.
They won’t see any of the data of their competitors. There is no opportunity for competitive insights
or price fixing.” She continued, “But customs in Newark will have access across all the channels to see
all the information they need to clear cargo, whether it is Maersk or MSC.”

Evaluating Blockchain

Maersk and IBM began a series of pilots in June 2016 to evaluate blockchain as a technology. Wilson
described one of the pilots, “We identified a trade lane, which ran from the port in Houston to the port
in Rotterdam. Using Maersk Line ships, we ran some customers through the trade lane. The customers
that we were using were Dupont, Dow Chemical, and Tetra Pak,” said Wilson. He continued, “We
were testing the value proposition as well as the technological capabilities at the same time. As each
shipment was completed, we were able to go through and identify different examples where value
could be generated.” Wieck added, “We absolutely saw an improved process flow and greater
visibility. We also proved that we could address the privacy and security concerns that everybody
had.” Maersk and IBM also worked with government agencies during this period, including the
Customs Administration in the Netherlands, and the US Department of Homeland Security.

Global Trade Digitization
In March 2017, Maersk and IBM announced that they planned to create a global trade digitization

(GTD) platform for all of the shipping industry (see Exhibits 7 through 9). The platform would provide
organizations with a secure digital solution for exchanging digital documents and allow for increased
visibility into the supply chain. 61 Wilson described the project as, “A utility for the industry which
could lower the barriers to trade.” Maersk and IBM thought that by using digital solutions, the GTD
platform would, “provide more transparency and simplicity in the movement of goods across borders
and trading zones.” 62

The platform would be made available to every stakeholder in the shipping ecosystem including
freight forwarders, ports, shippers, customs authorities and rival shipping lines.63 “The value
proposition will be different for a port operator, a shipper, a trucker, or a shipping line. We are
developing value propositions for all of the players,” said White. Instead of complex peer-to-peer
messaging systems, Maersk envisioned a variety of different parties exchanging information through
the GTD platform. Maersk would not act as an intermediary for the rest of the industry. Instead, the
GTD platform would be neutral and function as a, “single conduit of truth.”

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A Blockchain Solution

Maersk and IBM also revealed that the GTD platform would be a blockchain solution. “We think
blockchain provides capabilities that weren’t present up until this point. It enables people to really
embrace the step of digitization,” said Clerc. He continued, “What blockchain does today is offer a level
of security that is significantly higher than paper documentation. That’s why I think the time has come
to subject the information and documentation processes to a similar level of disruption to what the
container did to the physical flow of goods fifty years ago.” White chimed in, “Where blockchain
changes the game is having permissioned access to ensure the visibility so the people that are involved
in a transaction know it is authenticated. It’s verifiable. If someone on the block sees something has
been changed at any point in time, everybody on the block can see it. People can have information
transmitted on a secure platform where they can have trust.” He added, “Instead of having one
centralized party determining what is true, you can distribute that trust and that ownership of truth to
a large number of different parties.”

Shipping Information Pipeline

Maersk created two initial commercial solutions for the GTD that it hoped would help with the
digitization of the supply chain. The first was the shipping information pipeline which the company
explained, “will provide end-to-end supply chain visibility to enable all actors involved in managing a
supply chain to securely and seamlessly exchange information in real time,”(see Exhibits 10 and 11).64
Wieck described the product as having, “all the major data and information needed to track and trace
a shipment.” For example, shippers would be able to see if a specific container was delayed in a port
or had already been discharged. White explained, “Eventually what it will do is take away these blind
spots because companies will get visibility across the supply chain. They will get one set of data, which
means they don’t need to develop their own system to create their own visibility, but they can simply
extract the data. That saves them a lot of money.” Various firms would update the information on a
shipment in the shipping information pipeline as they handled the cargo during its journey. For
instance, a freight forwarder would update the pipeline when it initially sealed a container at its
warehouse. Subsequently, Maersk could amend the data when it loaded the container onto one of its
ships. Maersk architected the shipping information pipeline to protect competitive information. Only
the companies participating in a shipment would have visibility into the shipping events for that cargo.

Paperless Trade

Maersk also intended to offer a capability called paperless trade which would, “digitize and
automate paperwork filing by enabling end-users to securely submit, validate, and approve documents
across organizational boundaries”65 (see Exhibit 12). Utilizing blockchain technology, trusted
stakeholders could digitally access documents, and approved parties could securely sign those forms.
“Today companies accumulate all these physical documents. Any time any of these documents has a
field that is not filled out correctly or is forgotten, the physical flow of goods stops. If we have
something that is digital, we can significantly increase the velocity of goods. Not by sailing faster but
by simply taking out all the delays and mistakes,” said White. For instance, three separate government
agencies had to sign documents to authorize the exporting of flowers from the port in Mombasa. As
part of that approval process, shippers needed to fill out six different forms such as a packing list and
certificate of origin. With the paperless trade solution, the shipper could create digital forms that all
three agencies could sign. 66 The team at Maersk believed these, “blockchain-based smart contracts
would ensure all required approvals are in place, helping speed up approvals and reducing
mistakes.”67 Every paperless trade event, such as the creation of a packing list, would be stored on a
platform built on blockchain. Wilson explained that paperless trade was, “like a cloud-based storage

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system for very sensitive documents. Therefore we need to have a level of security and traceability that
a normal solution does not give us.”

Creating a Platform

Wilson reflected on the idea of building a platform for global trade, “Everybody recognizes that this
something that needs to be done. There just has not been anybody taking those actions to date for a
few reasons. It is really hard to build an industry solution. Not that many companies have the
capability, know-how, desire, and money to pull something like this,” He added, “Essentially what we
saw with blockchain was a chance to do it right. Not just with carriers and shippers involved but the
entire supply chain ecosystem.” “It is one of those initiatives where I believe all the ecosystem
participants have something to gain from this,” said White. Wilson added, “Even people we would see
as competitors to Maersk Line have publically signaled that the development of an industry utility like
this is something that has considerable value.” Initially, Maersk’s plans for blockchain did not involve
the creation of an industry-wide platform. During the pilot phase, executives altered their strategy.
“We decided that this would only be effective if it was done as an industry initiative. If it was just
Maersk and IBM as a contract for a client, that wasn’t going to be very compelling,” said Wieck.

Establishing a Joint Venture
Once Maersk decided to create the GTD platform, company executives had to determine the

ownership structure for the project. After weighing their options, the senior management at Maersk
chose to form a joint venture with IBM. Once regulatory approval occurred, and the company was
officially formed, Maersk would own 51% of the joint venture with IBM controlling the remaining 49%.
Maersk executives expected regulatory approval to occur by May 2018. Both IBM and Maersk would
have board seats in the joint venture alongside independent board members.68 The companies
structured the joint venture in a manner that ensured no organization received any special access.
Maersk and IBM chose to make White the new CEO of the joint venture and placed the headquarters
of the new company in the New York City area.69 Prior to his new role, White had been the president
of Maersk Line’s North American division.

Wilson explained the thought process behind launching the joint venture, “The intention behind
the initiative is to create a solution for the industry to solve issues relating to visibility and digitization.”
He continued, “Setting up a company independent from Maersk furthers this goal.” Clerc added, “The
big thing for us is that for the GTD to be successful, it needs to be neutral. It would be very difficult to
convince other shipping lines to commit data into something where there is not a complete firewall
between the platform and their competitor. It was pretty clear to us that if it was not a separate
company, we would not get other shipping lines to participate.”

Challenges for the Joint Venture
The teams at Maersk and IBM understood they faced a number of thorny issues as the joint venture

moved forward. Wieck explained, “Getting the ecosystem to engage and participate is going to be the
critical factor. The whole premise centers around a data platform that has the majority of data in
operation.” “You’re talking about a global network. We do business in 130 countries. It will take two
or three years to get full critical mass,” said White. He continued, “Signing up vendors like terminals
and shipping lines will take a lot of effort because there are so many players. It is a big industry, and
you need to add a lot of different players because if you still have these black spots because certain
parties haven’t joined the ecosystem, then a big part of the value proposition goes away.” “The area

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that we clearly want to add to the ecosystem are the other shipping lines,” said Wieck. Wilson added,
“Some of Maersk Line’s competitors could be worried about sharing their data with a company which
is affiliated with Maersk, even if there are no operational ties back to it. We have worked hard to make
sure that is not the case.” Wilson acknowledged that some firms might be hesitant to adopt the
platform, “There might be a situation where somebody comes up with a better thing, so people are
worried about investing in something which will become the second-best solution in the future. People
want to make sure they are backing the right horse,” said Wilson. White chimed in, “The industry is
ripe for disruption. It could be that somebody else from the outside comes in with a superior solution.”
Wilson observed, “There is no question whether or not this should be done. The question from the
industry is whether we should be the ones doing this. We need to answer that question.”

Other Blockchain Efforts in Supply Chain

Maersk was not the only company experimenting with blockchain technology for managing
logistics and supply chain processes. Walmart tracked 1.1 million items through blockchain to trace the
history of products like almond milk and chicken. Firms such as Unilever, Kroger, and Nestle utilized
blockchain to keep track of merchandise. 70 Airbus and Daimler were in the midst of evaluating the
technology for tracking the numerous components in their products. 71 In March 2018, Accenture
revealed it had formed a consortium to tackle problems with global shipping using blockchain
technology. The other members of the consortium were AB InBev, an undisclosed customs
organization in Europe, a leading shipping line, and a top logistics firm.72

Moving Forward
As White stared at the endless lines of shipping containers that filled the Port of Rotterdam, he

contemplated his situation. For the past year, the GTD platform had been in a beta phase. During that
time Maersk and IBM had thoroughly tested the new product with a select set of participants from the
shipping ecosystem. The GTD platform would start to have limited availability in a few months. White
anticipated that the joint venture would officially launch by May 2018. Maersk and IBM intended to
make the GTD platform available to the entire shipping ecosystem by Q3 2018. The companies were
still in the process of evaluating the commercial model for the GTD. White questioned if the joint
venture was the best way for Maersk to tackle the issues that plagued the shipping industry. What
challenges would White need to address in the future?

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518-089 Maersk: Betting on Blockchain

10

Exhibit 1 Madison Maersk in the Port of Rotterdam

Source: Maersk Line, “Madison Maersk at the Port of Rotterdam—Maersk Line,” screenshot via YouTube video, November

25, 2015, https://www.youtube.com/watch?v=kqtPgPJC3TM, accessed March 2018.

Exhibit 2 Maersk 2017 Revenue by Business Unit

Source: A.P. Moller–Maersk A/S, 2017 Annual Report (Copenhagen: A.P. Moller–Maersk A/S, 2018), p. 11.

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Maersk: Betting on Blockchain 518-089

11

Exhibit 3 Maersk Shipping Containers on Multiple Modes of Transportation

Source: Company documents.

Exhibit 4 Market Share of Top Vendors in Global Container Fleet Market, March 2018 (% volume)

Source: Company documents.

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[email protected] or 800-988-0886 for additional copies.

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This document is authorized for use only by Jayant Khandelwal ([email protected]). Copying or posting is an infringement of copyright. Please contact
[email protected] or 800-988-0886 for additional copies.

Maersk: Betting on Blockchain 518-089

13

Exhibit 6 Documentation Involved in a Shipment of Goods from Kenya to Europe

Source: Company documents.

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[email protected] or 800-988-0886 for additional copies.

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This document is authorized for use only by Jayant Khandelwal ([email protected]). Copying or posting is an infringement of copyright. Please contact
[email protected] or 800-988-0886 for additional copies.

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[email protected] or 800-988-0886 for additional copies.

518-089 Maersk: Betting on Blockchain

16

Exhibit 9 Industry Pain Points and Global Trade Digitization Benefits (partial list)

Source: Company documents.

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[email protected] or 800-988-0886 for additional copies.

Maersk: Betting on Blockchain 518-089

17

Exhibit 10 Illustration of Documentation Processes in the Shipping Information Pipeline

Source: Company documents.

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[email protected] or 800-988-0886 for additional copies.

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This document is authorized for use only by Jayant Khandelwal ([email protected]). Copying or posting is an infringement of copyright. Please contact
[email protected] or 800-988-0886 for additional copies.

51
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[email protected] or 800-988-0886 for additional copies.

518-089 Maersk: Betting on Blockchain

20

Endnotes

1 Seabury Consulting, “The future of Sea Freight and its Impact on the Air Cargo Industry,” May 1, 2017, p. 5,
http://www.cnsc.net/events/Documents/cns2017-future-sea-freight-michel-looten-may1.pdf, accessed March 2018.

2 Maersk, “Go Back in Time with A.P. Moller-Maersk,” Maersk website, https://www.maersk.com/explore/explore-our-
history, accessed March 2018.

3 Maersk, “Go Back in Time with A.P. Moller-Maersk,” Maersk website, https://www.maersk.com/explore/explore-our-
history, accessed March 2018.

4 Hariesh Manaadiar, “Difference Between a Liner and Tramp Service,” Shipping and Freight Resource, July 29, 2009,
https://shippingandfreightresource.com/liner-and-tramp-service/, accessed March 2018.

5 Forest L. Reinhardt, Ramon Casadesus-Masanell, and Frederik Nellemann, “Maersk Line and the Future of Container
Shipping,” HBS No. 712-449 (Boston: Harvard Business School Publishing, 2015), p. 8.

6 Forest L. Reinhardt, Ramon Casadesus-Masanell, and Frederik Nellemann, “Maersk Line and the Future of Container
Shipping,” HBS No. 712-449 (Boston: Harvard Business School Publishing, 2015), p. 8.

7 David Collis and Matthew Shaffer, “Group Functions at the Maersk Group,” HBS No. 715-432 (Boston: Harvard Business
School Publishing, 2016), p. 1.

8 Maersk, “A New Team at the Helm,” Maersk website, November 23, 2016, https://www.maersk.com/stories/a-new-team-
at-the-helm, accessed March 2018.

9 Forest L. Reinhardt, Ramon Casadesus-Masanell, and Frederik Nellemann, “Maersk Line and the Future of Container
Shipping,” HBS No. 712-449 (Boston: Harvard Business School Publishing, 2015), p. 8.

10 David Collis and Matthew Shaffer, “Group Functions at the Maersk Group,” (Boston: Harvard Business School Publishing,
2016), p. 1-2.

11 A.P. Moller- Maersk A/S, 2017 Annual Report (Copenhagen: A.P. Moller- Maersk A/S, 2018), p. 41.

12 Richard Milne, “AP Moller Maersk Sells Oil Tanker Business,” Financial Times, September 20, 2017,
https://www.ft.com/content/9cd15e82-9dd4-11e7-8cd4-932067fbf946, accessed March 2018.

13 Maersk, “Welcome to Maersk Line,” Maersk website, https://www.maerskline.com/about/profile, accessed March 2018.

14 A.P. Moller- Maersk A/S, 2017 Annual Report (Copenhagen: A.P. Moller- Maersk A/S, 2018), p. 9.

15 Reuters staff, “Maersk Line to Pay $4 Billion for Hamburg Sud,” Reuters, April 28, 2017,
https://www.reuters.com/article/us-hamburgsud-m-a-maersk/maersk-line-to-pay-4-billion-for-hamburg-sud-
idUSKBN17U0VM, accessed March 2018.

16 Maersk, “Maersk Line Obtains Final Regulatory Approval and Closes the Acquisition of Hamburg Sud,” press release,
November 30, 2017, https://www.maerskline.com/en/news/2017/11/30/ml-final-regulatory-approval-hamburg-sud,
accessed March 2018.

17 A.P. Moller- Maersk A/S, 2017 Annual Report (Copenhagen: A.P. Moller- Maersk A/S, 2018), p. 11.

18 Maersk, “Welcome to Maersk Line,” Maersk website, https://www.maerskline.com/about/profile, accessed March 2018.

19 APM Terminals, “About Us,” APM Terminals website, http://www.apmterminals.com/en/about-us, accessed March 2018.

20 APM Terminals, “North America,” APM Terminals website, http://www.apmterminals.com/en/operations/north-
america, accessed March 2018.

21 APM Terminals, “About Us,” APM Terminals website, http://www.apmterminals.com/en/about-us, accessed March 2018.

22 Damco, “About Damco,” Damco website, http://www.damco.com/en/about-
damco/~/media/69ac8536ae6d4efe9217676011a826bb, accessed March 2018.

23 World Shipping Council, “History of Containerization,” World Shipping Council website,
http://www.worldshipping.org/about-the-industry/history-of-containerization, accessed March 2018.

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[email protected] or 800-988-0886 for additional copies.

Maersk: Betting on Blockchain 518-089

21

24 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 23, accessed March 2018.

25 “Global Container Shipping to Pass 200 Million TEU in 2017,” Port Technology, December 7, 2017,
https://www.porttechnology.org/news/global_container_shipping_to_pass_200_million_teu_in_2017, accessed March 2018.

26 MarketLine, “Global Marine Freight,” May 2017, p. 10, accessed March 2018.

27 Jonathan Saul, “Global Shipping Giant Maersk is Reeling from the Ransomware Fallout,” Reuters, June 29, 2017,
https://www.reuters.com/article/us-cyber-attack-maersk/global-shipping-feels-fallout-from-maersk-cyber-attack-
idUSKBN19K2LE, accessed March 2018.

28 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 28, accessed March 2018.

29 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 22, accessed March 2018.

30 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 27, accessed March 2018.

31 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 58, accessed March 2018.

32 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 27, accessed March 2018.

33 Costas Paris, “The State of Global Shipping in Three Charts,” The Wall Street Journal, June 7, 2017,
https://www.wsj.com/articles/shipping-shows-signs-of-recovery-1496844000, accessed March 2018.

34 Technavio, “Global Container Fleet Market: 2017-2021,” Technavio website, December 2016, p. 55, accessed March 2018.

35 Forest L. Reinhardt, Ramon Casadesus-Masanell, and Frederik Nellemann, “Maersk Line and the Future of Container
Shipping,” HBS No. 712-449 (Boston: Harvard Business School Publishing, 2015), p. 2-3.

36 Lucas Mearian, “Blockchain Will be the Killer App for Supply Chain Management in 2018,” Computerworld, January 18, 2018,
https://www.computerworld.com/article/3249252/emerging-technology/blockchain-will-be-the-killer-app-for-supply-
chain-management-in-2018.html, accessed March 2018.

37 Hariesh Manaadiar, “What is EDI and What is the Importance of EDI in Current Day Shipping?,” Shipping and Freight
Resource, February 1, 2010, https://shippingandfreightresource.com/what-is-edi-and-what-is-the-importance-of-edi-in-
current-day-shipping/, accessed March 2018.

38 World Shipping Council, “Container Shipping in Ten Steps,” World Shipping Council website, http://www.world
shipping.org/about-the-industry/how-liner-shipping-works/the-step-by-step-process, accessed March 2018.

39 World Shipping Council, “Container Shipping in Ten Steps,” World Shipping Council website, http://www.world
shipping.org/about-the-industry/how-liner-shipping-works/the-step-by-step-process, accessed March 2018.

40 John Churchill, “Maersk and IBM Launch Digital Joint Venture,” Maersk website,
https://www.maersk.com/stories/maersk-and-ibm-launch-digital-joint-venture, accessed March 2018.

41 Chris Stokel-Walker, “The Blockchain Will Save Healthcare and Shipping Billions of Pounds,” Wired, May 18, 2017,
http://www.wired.co.uk/article/blockchain-ibm-hyperledger-business, accessed March 2018.

42 Jacob Gronholt-Pedersen, “ Maersk, IBM to Launch Blockchain-Based Platform for Global Trade,” Reuters, January 16, 2018,
https://www.reuters.com/article/us-maersk-blockchain-ibm/maersk-ibm-to-launch-blockchain-based-platform-for-global-
trade-idUSKBN1F51DE, accessed March 2018.

43 Jacob Gronholt-Pedersen, “ Maersk, IBM to Launch Blockchain-Based Platform for Global Trade,” Reuters, January 16, 2018,
https://www.reuters.com/article/us-maersk-blockchain-ibm/maersk-ibm-to-launch-blockchain-based-platform-for-global-
trade-idUSKBN1F51DE, accessed March 2018.

44 “Shipping Containers,” Quartz, March 16, 2018, https://qz.com/email/quartz-obsession/1230696/, accessed March 2018.

45 Bridget van Kralingen, “IBM, Maersk Joint Venture Blockchain Venture to Enhance Global Trade,” IBM, January 16, 2018,
https://www.ibm.com/blogs/think/2018/01/maersk-blockchain/, accessed March 2018.

46 Michael White, “Digitizing Global Trade with Maersk and IBM,” IBM website,
https://www.ibm.com/blogs/blockchain/2018/01/digitizing-global-trade-maersk-ibm/, accessed March 2018.

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518-089 Maersk: Betting on Blockchain

22

47 Roger Aitken, “IBM Forges Global Joint Venture With Maersk Applying Blockchain to ‘Digitize’ Global Trade,” Forbes,
January 16, 2018, https://www.forbes.com/sites/rogeraitken/2018/01/16/ibm-forges-global-joint-venture-with-maersk-
applying-blockchain-to-digitize-global-trade/#7aa6a550547e, accessed March 2018.

48 Robert Hackett, “IBM and Maersk are Creating a New Blockchain Company,” Fortune, January 16, 2018,
http://fortune.com/2018/01/16/ibm-blockchain-maersk-company/, accessed March 2018.

49 Robert Hackett, “Why Big Business is Racing to Build Blockchains,” Fortune, August 22, 2017,
http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/, accessed March 2018.

50 Nathaniel Popper and Steve Lohr, “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” The New
York Times, March 4, 2017, https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html, accessed
March 2018.

51 Nathaniel Popper and Steve Lohr, “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” The New
York Times, March 4, 2017, https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html, accessed
March 2018.

52 Nathaniel Popper and Steve Lohr, “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” The New
York Times, March 4, 2017, https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html, accessed
March 2018.

53 Robert Hackett, “Why Big Business is Racing to Build Blockchains,” Fortune, August 22, 2017,
http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/, accessed March 2018.

54 Robert Hackett, “Why Big Business is Racing to Build Blockchains,” Fortune, August 22, 2017,
http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/, accessed March 2018.

55 “Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped,” MIT Technology Review, August 23, 2017, https://www.
technologyreview.com/s/608716/bitcoin-transactions-arent-as-anonymous-as-everyone-hoped/, accessed March 2018.

56 Coindesk, “Bitcoin (USD) Price,” Coindesk website, https://www.coindesk.com/price/, accessed March 2018.

57 Tae Kim, “UBS: Cryptocurrencies Like Bitcoin are ‘The Bubble to End All Bubbles,” CNBC, December 11, 2017,
https://www.cnbc.com/2017/12/11/ubs-cryptocurrencies-like-bitcoin-are-the-bubble-to-end-all-bubbles.html, accessed
March 2018.

58 Oscar Williams-Grut, “Visa CFO on Cryptocurrencies: ‘You Have a Bubble When the Guy Shining Your Shoes Tells You
What Stock to Buy,” Business Insider, March 16, 2018, http://www.businessinsider.com/visa-cfo-vasant-prabhu-on-
cryptocurrency-bubble-2018-3, accessed March 2018.

59 Nathaniel Popper and Steve Lohr, “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” The New
York Times, March 4, 2017, https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html, accessed
March 2018.

60 Juniper Research, “IBM Ranked Number One Blockchain Technology Leader,” press release, September 18, 2017, https://
www.juniperresearch.com/press/press-releases/ibm-ranked-no-1-blockchain-technology-leader, accessed March 2018.

61 IBM, “Maersk and IBM Unveil First Industry-Wide Cross Border Supply Chain Solution on Blockchain,” press release,
March 5, 2017, https://www-03.ibm.com/press/us/en/pressrelease/51712.wss, accessed March 2018.

62 IBM, “Maersk and IBM Unveil First Industry-Wide Cross Border Supply Chain Solution on Blockchain,” press release,
March 5, 2017, https://www-03.ibm.com/press/us/en/pressrelease/51712.wss, accessed March 2018.

63 IBM, “Maersk and IBM Unveil First Industry-Wide Cross Border Supply Chain Solution on Blockchain,” press release,
March 5, 2017, https://www-03.ibm.com/press/us/en/pressrelease/51712.wss, accessed March 2018.

64 Maersk, “Maersk and IBM to Form Joint Venture Applying Blockchain to Improve Global Trade and Digitize Supply
Chains,” press release, January 16, 2018, https://www.maersk.com/press/press-release-archive/maersk-and-ibm-to-form-
joint-venture, accessed March 2018.

65 Maersk, “Maersk and IBM to Form Joint Venture Applying Blockchain to Improve Global Trade and Digitize Supply
Chains,” press release, January 16, 2018, https://www.maersk.com/press/press-release-archive/maersk-and-ibm-to-form-
joint-venture, accessed March 2018.

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[email protected] or 800-988-0886 for additional copies.

Maersk: Betting on Blockchain 518-089

23

66 IBM Blockchain, “IBM and Maersk Demo: Cross-Border Supply Chain Solution on Blockchain,” video accessed via
YouTube, March 15, 2017, https://www.youtube.com/watch?v=tdhpYQCWnCw, accessed March 2018.

67 Maersk, “Maersk and IBM to Form Joint Venture Applying Blockchain to Improve Global Trade and Digitize Supply
Chains,” press release, January 16, 2018, https://www.maersk.com/press/press-release-archive/maersk-and-ibm-to-form-
joint-venture, accessed March 2018.

68 John Churchill, “Maersk and IBM Launch Digital Joint Venture,” Maersk website,
https://www.maersk.com/stories/maersk-and-ibm-launch-digital-joint-venture, accessed March 2018.

69 John Churchill, “Maersk and IBM Launch Digital Joint Venture,” Maersk website,
https://www.maersk.com/stories/maersk-and-ibm-launch-digital-joint-venture, accessed March 2018.

70 Christopher Mims, “Why Blockchain Will Survive, Even If Bitcoin Doesn’t,” The Wall Street Journal, March 11, 2018,
https://www.wsj.com/articles/why-blockchain-will-survive-even-if-bitcoin-doesnt-1520769600, accessed March 2018.

71 Robert Hackett, “Why Big Business is Racing to Build Blockchains,” Fortune, August 22, 2017,
http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/, accessed March 2018.

72 “Accenture’s Shipping-Based Blockchain Project Gets Approval,” Zack’s Equity Research, March 15, 2018, https://www.
zacks.com/stock/news/295793/accentures-shippingbased-blockchain-project-gets-approval, accessed March 2018.

This document is authorized for use only by Jayant Khandelwal ([email protected]). Copying or posting is an infringement of copyright. Please contact
[email protected] or 800-988-0886 for additional copies.

Maersk, an industry leader in the shipping industry, evaluated the industry and listed numerous

problems that were highly costly to all parties involved. Maersk started working with IBM in 2014 to

develop a strategy to solve these problems and the two companies decided to create a Global Trade

Digitization platform, utilizing blockchain technology to provide more transparency and simplicity in the

tracking of goods throughout the entire supply chain.

1. Inefficient Paper-Based Processes

The shipping industry relies heavily on physical documents, stamps, and papers. For every transaction

there is a massive amount of paperwork produced, which is expensive and slows down the flow of goods

tremendously. The cost of all this documentation can be about 20% of the overall cost of the physical

transportation itself. A manual paper-based process is also error-prone, which causes many delays in the

shipment of goods.

2. Little Visibility into Status of Goods as They Move Through the Supply Chain

There is very little transparency in the status of goods as shipments arrive through ports. Because it is a

people-based process, it requires clear and consistent communication between all these members of the

supply chain to know the status of goods. Many times, companies know when a shipment arrives in a

port but don’t know when it will make it out. Additionally, the shipping industry has used a 60-year-old

Electronic Data Interchange, which does not give end-end transparency needed to accurately predict

when goods will be delivered.

3. Maritime Fraud

Because of the inefficient paper and people-based processes, with limited transparency across the

supply chain, fraud is a major issue in the industry. One source from the case calculated the cost of fraud

up to about $600 billion a year, which is a massive cost to all members of the supply chain.

Blockchain

Blockchain is a technology that can solve these problems. The architecture of the system chains together

entries so they cannot be modified later, ensuring a transparent, secure, and reliable record of

transactions. This creates a far improved process flow and greater visibility. The smart digital contracts

speed up the flow of goods and reduce human mistakes. All participants in the supply chain have

distributed trust and ownership. Overall, blockchain technology improves the process flow, provides far

greater visibility and security, and reduces costs of the flow of goods. It is a technology that will

revolutionize the shipping industry.

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