At last week’s Global Maritime Forum, we had an inspiring interactive session on the future of maritime transport. With the discussions still fresh in my memory, in this blog post I am sharing some personal “thinking aloud” on what we might learn from past long-term trends.
For your agenda: Colleagues and experts will discuss and present more in-depth analysis at our upcoming expert meeting at UNCTAD on 21-23 November 2018, including the launch of a special publication on 50 years of our Review of Maritime Transport.
1) The geography of seaborne trade
Fifty years ago, developing countries were largely exporters of raw materials who imported high value / low volume manufactured goods. In terms of volumes, as a group, developing countries thus had a huge trade surplus.
Today, developing countries import more volumes of seaborne trade than they export. China (but not only China) is importing iron ore, coal and oil from Brazil, Australia, et al, and produces manufactured goods for export. Among the underlying causes for this shift in the geography of seaborne trade are the lower labour costs in developing countries.
In the future, the global division of labour might shift again, as labour costs could become less relevant, logistics and services exports become more important, and thanks to robotics and global value chains, manufacturing will be increasingly globalized.
2) Globalized production of shipping
Fifty years ago, we had maritime nations that provided maritime transport services, and the rest of the world were their clients. A ship would – for example – be built, manned, owned, flagged, and insured in Germany, carrying cargo from and to Germany.
Today, we have a globalized production of maritime transport services. A container ship may still be owned in Germany, but the services could – for example – be provided by a Malaysian operator, with a ship that was built in Korea, is manned by Philippine seafarers, flagged in Liberia, insured in the UK, transports cargo from Viet Nam to the Netherlands in Chinese built containers, passing by transhipment ports operated by a terminal operator from Dubai, before being scrapped on a beach in India. Different countries largely specialize in different segments of the maritime transport chain.
In future, we may observe a return to stronger maritime clusters, as countries or regions seek to benefit from synergies between different port and shipping segments. Latest data suggests, for example, that some countries that have a strong shipping community have also been able to attract national owners back to the national flag, e.g. in Hong Kong, Singapore, and the United Kingdom.
3) What the ships carry
Fifty years ago, manufactured goods were transported as general cargo on multi-purpose ships. More than half of seaborne trade by volume was liquid bulk.
Today, containerized cargo is more than ten times the volume of non-unitised general cargo. Container carriers have consolidated, deploying ever larger ships. Dry cargo has by far overtaken liquid cargo, as we need to move relatively less energy to the places of production.
In the future, we may have far less movement of energy commodities such as oil and coal, as CO2 emissions need to be cut significantly. Perhaps we will have containerization 2.0 with containers for containers.
4) Shipping is part of logistics
Fifty years ago, maritime transport was mostly seen as a port-to-port shipping service. Ships spent more time in port than at sea. Ports were full of warehouses and a large part of expenditures in logistics was on inventory holding. While we do not have global statistics, data for the United States show, for example, that within national logistics expenditures, in 1980 the US economy spent more money on inventory holding than on transport.
Today, shipping has to be seen as part of global value chains, affected by trends in logistics, with priority given to trade and transport facilitation. Ships spend more time at sea than in port, and operators spend less on inventory holding. In the United States, today, the economy spends twice as much on transport than on inventory holding.
In the future, making use of latest technologies, we will have Just On Time Deliveries thanks to the Internet of Things, 100% tracking, and Artificial Intelligence. Although extrapolation is risky, we can most certainly expect that the share of expenditures on inventory holding will continue to decline, and trade and transport facilitation will be of increasing importance.
5) Technological progress will never be as slow as today
Fifty years ago, the container had just started its take-off. Since then, we have seen not only containerization, but also the creation of the world wide web and exponential growth of the use of information and communication technologies.
Today, digital and transport connectivity go hand-in-hand. Trade and transport facilitation rely on information and communication technologies, and improved transport connectivity has enabled the exponential growth of e-commerce.
In the future, well, we do not know the unknowns. If the past technological progress is anything to go by, we can expect the unexpected. Artificial intelligence will come up with solutions to challenges that do not yet exist. Regulations and policies need to be drafted in a non-prescriptive way to avoid limiting the use of not-yet-existing technologies.
A complex scenario
These trends (and others – no claim to be complete) happen in a framework where industry and policy makers need to take into account a complex range of policy objectives. A country’s policy makers will continue to aim at ensuring access to cost-efficient port and shipping services for their shippers. They will also continue to seek the promotion of employment in their own country’s maritime sector. And, increasingly, they will need to minimize the environmental and social costs of maritime transport.
From air pollution and congestion in port cities to Green House Gas emissions and security concerns, maritime policies will have to respond to fast-paced changes in trade and technologies, while at the same time keeping in mind the potential external costs of the ever growing maritime transport volumes. Interesting times lie ahead for the maritime transport of the future.
Note: The usual disclaimers apply