Global supply chains are becoming increasingly digital in nature as companies in the chain shift focus to be part of the trade ecosystem.
Senior Blockchain Advisor at Trustworks, Henrik Hvid Jensen, noted in an article earlier this year that, "the interactions happening among several different types of private and public participants who in many cases do not know/trust each other beforehand, but need to do business together for the global trade to work."
We caught up with Wolfgang Lehmacher to discuss the challenges he foresees in the establishment of the Global Trade Identity (GTID), future trends for shipping, and his thoughts on the current US/ China trade war.
Lehmacher is a thought leader and practitioner in supply chain and logistics. At different stages of his career he has held the position of; Director, Head of Supply Chain and Transport Industries at the World Economic Forum, Partner and Managing Director (China and India) at the global strategy firm CVA, President and CEO of GeoPost Intercontinental at French La Poste.
He is a FT, Forbes, Fortune, BI contributor and author of books, including The Global Supply Chain.
We caught up with him after his presentation at the Shipping Transformation Summit earlier this year.
Watch the video now or read the transcript below.
Iain Gomersall: What challenges do you foresee in the establishment of the Global Trade Identity (GTID)?
Wolfgang Lehmacher: The Global Trade Identity is about the identity itself.
It’s about global interoperability, user platforms, and the potential of distributed ledger technologies – such as Blockchain – to ensure integrity and security of the identity management system.
The implementation of this important step in digitalization of the global supply chain depends on several factors. Firstly, there are sponsors with capabilities and the willingness to support the initiative, to ensure neutrality for the industry, and to support the technological development.
Secondly, we will need partners for proof of concepts, to test the identity and work out the finer details, and to work on global interoperability. For example, through combining single windows.
We need to launch projects to validate and understand the risks and opportunities involved in using various user platforms, and of course to understand what the role of Blockchain technology could be.
A good start would be to engage 3-5 countries to help run approximately 6-month long projects, on the aforementioned points.
Q: What do you think are future trends that will affect the shipping industry with regards to trade?
WL: The first trend is the move from towards regional platforms and less intercontinental transport. Secondly, I foresee is about sustainable and green shipping. The third is the Industrial Revolution.
Q: What challenges are associated with these trends (mentioned above)?
WL: With the changing trade pattern comes the need of two different types of value chains.
The first is the mass-volume highly standardized value chain which requires standardized, digitized ports and large vessels. The second value chain requires flexible ports and smaller ships.
With the trends and associated pressure towards green and sustainable shipping, comes some major challenges. These are reflected in the conversations around IMO 2020, but IMO 2050 means the requirements to meet the climate targets will be a much greater challenge.
IMO 2020 comes significant costs to the shipping industry, and right now it is not clear who will be footing the bill. IMO 2050, we will more than likely need technology which has not been invented yet. I believe this will require a longer supply chain where partner collaborate, decide on standards, and technologies to push because this will give manufacturers to confidence to invest in research and development.
When we reach this point, we can truly start to work on tangible solutions to help us to achieve the climate goals.
Q: The Trade Wars and their impact on Asian and global trade. Are there opportunities?
WL: There are countries that worry – perhaps for good reasons – and there are countries which will win.
Currently, we see that supply chains move away from US and from China.
China is buying in alternative countries and so is the United States. Over the long run, I believe that the trade wars will benefit Asia.
Why? Because China is now being forced to invest in much more advanced technologies to produce products which they are not able to purchase in the United States for some time. Chinese companies are forced to internationalise, to enter new markets, and grow faster in these markets than their Western competitors.
In the process, countries in Asia – particularly South and South-East Asia – will benefit because of the United States economy needs providers for their goods, and many of them are in Asia.
Q: Why is an event of this nature important to the industry?
WL: The shipping industry is part of the supply chain industry, and the industry is very complex.
Shipping is fragmented, has several parties involved, and has enormous challenges to come to solutions which work for everybody – including manufacturers, equipment and technology providers bringing solutions to the supply chain.
We need to discuss and understand each other’s requirements and have platforms to agree on the way forward which is best for all concerned.
Q: What kind of conversations have you had at the event?
WL: In the context of helping companies to transform in the digital age, I expect a lot of new insights in technological development and I expect to hear of the challenges the individual players have.