The supply chain industry rarely gains notoriety in mainstream media – unless, of course, in the event of a catastrophic international disaster as with the recent cyber-attack of A.P. Moller-Maersk, the world’s largest cargo and freight carrier. You may recognize the Danish logistics conglomerate from their iconic seven-pointed star logo, incredible photography assets, or pioneering the first Triple-E class vessel to breach 18K TEU carrying capacity, but its latest debut in the news wasn’t a PR event.
On Tuesday, June 27th, industry leading firms such as A.P. Moller-Maersk, Merck, Rosneft, Mondelez and others were victims of the second massive international ransomware attack in two months. WannaCry, the first round of malware, impacted operations at FedEx, Nissan, and the United Kingdom’s National Health Service by taking advantage of a flaw in Microsoft Windows. Even though the company released a security patch back in March, industries that required manual updates to their legacy systems failed to update timely. Petya, the latest modified version of WannaCry, caused serious disruption for airports, banks, hospitals, and especially international shippers.
So, what is ransomware? Ransomware is any malicious software designed to block access to a computer system until a sum of money has been paid. Petya infected computers company-wide, displaying a blackmailing message:
“If you see this text, then your files are no longer accessible, because they have been encrypted. Perhaps you are busy looking for a way to recover your files, but don’t waste your time. Nobody can recover your files without our decryption service.”
The ransom letter went on to provide instructions for anonymous payment through Bitcoin. This is where the story gets interesting for Maersk because Bitcoin isn’t a company; it’s a value-based, digital “currency” operating in an open-source, public network and the pioneer of blockchain design.
Originally known as ‘block chain,’ the system is simply a public ledger that records events in the order they occur, growing as completed sets of data are validated. Information within the blockchain is not stored within a single server. Instead, it is spread amongst large, public (or private) networks using the power of collaborative computing making it virtually un-hackable. Because blocks are linear, and chronological, an individual block of the “chain” also cannot be manipulated.
A.P. Moller-Maersk is vertically integrated, therefore Petya ransomware impacted all of its business units from container shipping and terminal handling to gas and oil production. Shippers all over the world reeled at the announcement as the world’s biggest shipping company struggled to resume operations and restore its systems. The quiet irony? A.P. Moller-Maersk’s shipping arm, Maersk Line, was already working with IBM to create a blockchain network for global trade (and they’re not the only ones).
Complex supply chains are ripe with fragmentation because services are typically spread across multiple providers who are quite protectionist when it comes to data collection surrounding their particular piece of business. The result of which is a lack of transparency and widespread inefficiency. In other words, there is no trust – but that’s nothing new to seasoned supply chain veterans. Maersk and IBM, however, are one of several early adopters looking to create a unified shipping ecosystem. The network will include shippers, freight forwarders, ocean carriers, ports, and customs regulators and enable these entities to seamlessly share transaction and documentation in real-time. Security breaches, like Petya and WannaCry, act as catalysts of change to speed past protesting naysayers and potentially revolutionize international logistics.
Would blockchain hurt or benefit the international logistics industry?