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Reading into the Cosco, Alibaba tie-up

News carried on this site on Tuesday that Chinese state-run shipping giant Cosco Shipping has entered into an agreement with e-commence conglomerate Alibaba and its fintech affiliate Ant Group to collaborate on blockchain applications in shipping has sparked plenty of conjecture about the scope and aims of the collaboration. Splash columnist Kris Kosmala takes a closer look at the deal. 

The joint initiative of Cosco and Alibaba, as well as the related agreement between Alibaba and China Merchants Ports (CMPort) bodes well for innovation in supply chain execution. Alibaba’s experience in digitalising supply chain transactions is comparable to that of Amazon with the exception of deep integration into the financial sphere of commerce, where Alibaba has established an enviable lead over its US-based competitor. 

Shippers won’t have any patience for competition

It was well understood that both companies have an opportunity to inject new thinking into the technology domain of the carriers associated with the GSBN and TradeLens initiatives. The financial expertise of Ant will be important to integrate in one place the transaction of sending a physical box of goods and settling all financial aspects of that shipment.

There are some that view the Cosco and Alibaba initiative as a competition to the Maersk/IBM TradeLens platform. I would be very cautious of positioning this agreement as a competitor to TradeLens.  Shippers/BCOs won’t have any patience for competition. Their supply chains are intertwined with operations of multiple transport carriers in the air, on the sea, and on land. Forcing them to select between competitive offerings not talking to each other doesn’t offer those shippers/BCOs any benefits. In fact, it forces them to either choose one from many or integrate their own internal systems to all. Either approach disadvantages the shippers. 

The carriers building competitive and not interconnected platforms facilitating global supply chains should take that into serious consideration. Failure to do so, will result in in shippers/BCOs becoming reluctant to invest in and participate in multiple initiatives until one, unified standard emerges.

Kris Kosmala

Kris Kosmala is a partner at Click & Connect where he advises companies trying to leverage digitalization to change their business competitive position.

Comments

  1. Front a Tsunami, surf the wave !!
    No matter the consequences at street level, the important thing is to stay higher. Proud of my logistic chain!!

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