The ocean container shipping industry is constantly changing as freight shipping companies adapt to ever-changing technology and growing customer expectations. Shipping businesses must also be focused on longer-term developments such as emerging economies, renewable energy, materials, and fuels to stay competitive.
The year 2020 has proven that there is no predicting the future, particularly when it comes to global industries. However, there are certain aspects of the container shipping industry that are progressing along a natural path. Whether this is in relation to automation or a shift in fuel type, change is inevitable.
Some current emerging trends will affect the future of the industry. Here are some of the key contributors to the ocean container shipping industry’s future, from short-term to long-term factors.
Certain short-term factors will have an impact on the immediate future of the ocean freight container shipping industry. The global pandemic has undoubtedly shaken things up, leading to accelerations in some trends and deceleration in others.
Responding to the Pandemic
Shipping companies will continue to respond to the pandemic. As countries ease restrictions alongside the vaccine rollout, shipping companies can adapt and develop protocols to improve operations.
During the most critical times throughout the pandemic, reduced cargo volumes contributed to an imbalance in the marketplace. Shipping companies opted to reduce capacity and lower costs to sustain profitability rather than market share. Despite the blank sailings, this resulted in stable freight rates despite the reduced demand.
While new safety and sanitation guidelines are likely to remain in place, shipping companies will continue to make adjustments along the supply chain as the marketplace reopens.
The pandemic has accelerated the use of digital tools and automation within the shipping industry as it reduces the need for human interaction. This is likely to continue in the future.
Although technology has been relied on significantly due to the pandemic, the digitization of specific shipping tasks has been emerging for many years.
As ships travel along their routes, they require specific documentation to dock at ports and enter territories. While there are electronic copies of such documents, many shippers still use paper. The maritime industry is one of the few major global industries using complicated paper-based systems to manage operations.
Documents, such as the Bill of Lading, will be created, approved, distributed, and tracked electronically, benefiting shippers, buyers, sellers, and port workers.
Other aspects of daily shipping activities such as digitized pre-arrival processing, customs applications, and electronic payments are likely to be the norm.
As shipping has been traditionally carried out with limited digital systems, a trend toward complete digitization must correspond with the introduction of comprehensive cybersecurity measures. Cyber attacks are becoming increasingly common globally, and significant market players are by no means immune.
Maersk, one of the world’s largest shipping companies, was victim to a cybersecurity attack in 2017 which led to approximately $300 million in damages.
As with digitization, the maritime industry has been slower to integrate automation than many other large industries. However, in a recent study by McKinsey, they reported that the leading practitioners from some of the top ports and shipping companies worldwide expect at least semi-automation to be a factor in greenfield projects over the next few years. 50% of them believe that at least half of the world’s top 50 ports will implement automated technologies within 5 years.
Automated ports are already in operation and are reported to be safer with more predictable performance. However, the capital required to develop them is quite high, and an automated port involves implementing new processes. This means it may be many years before we see widespread automation among large shipping companies and ports.
The transition towards widespread automation is likely to be gradual.
Environmentally Friendly Practices
There is increasing pressure for shipping businesses to reduce their carbon footprint through more environmentally friendly practices. Companies are developing technologies to create more efficient propellers, streamline hulls, and better route planning. These will contribute to more efficient carriers in the future.
As well as this, alternative fuels are being considered to lower pollution levels. Liquefied natural gas (LNG) is being viewed as an alternative fuel option to help shippers reduce their emissions and meet environmental targets. All of Hapag Lloyd’s recent fleet additions utilize LNG fuel.
Although oil-based fuels are likely to continue over the next few years, LNG is the frontrunner for alternative fuel in the long term.
A criticism of the shipping industry has been the lack of anticipation involved in operations. Ships spend around 40% of their time in port, waiting for a slot to open on a first-come, first-served system. While sailing, they spend approximately 40% of their time in ballast due to a lack of suitable cargo.
A method to avoid such inefficiencies may lie with data analytics. Data can be used to anticipate potential inefficiencies and problems, leading to more value creation.
Startups are currently in operation, finding the most profitable shipping routes by running data analysis and locating demand before it emerges. As the shipping industry becomes more technology-driven, data analytics will have a significant role in increasing efficiency.
Some industry changes are likely to take a little longer to come into effect. While it’s challenging to be sure about some advancements, here is what the container shipping industry could look like in the next 20 to 50 years.
Autonomous vehicles are being talked about concerning all industries, including the shipping industry. Fully autonomous ships that rely on only a contingency crew in case of emergency are on the horizon, with initial prototypes already in place. These are likely to be connected to ship terminals using cloud-based technologies.
Although autonomous ships are expected to emerge well into the future, Rolls Royce is expecting fully automated ships by the year 2035.
The current 20,000 TEU vessels may not be as big as they get. In their report predicting the next 50 years of the shipping industry, McKinsey predicted that we may see 50,000 TEU ships by the year 2067.
However, dock space is already a problem with bigger vessels. Ports will need several years of development to be capable of catering to these super-sized ships.
Shipping alliances have evolved since the first generation began in 1996. While Maersk Line has been a dominant player since the inception of alliances, there may be room for up-and-coming market players. Companies such as Yang Ming are exhibiting high growth potential, meaning we may see a shake-up in the industry alliance structure in the future.
Work with a World Class Shipping Company to Ensure Future Success
Whether your business operates in Asia, Europe, North America, or elsewhere, working with a first-rate shipping company, like Asiana USA, can help you maintain success when shipping. Visit our website or call us today at (855) 500-1808 for more information.