THE outlook for container shipping over the next 25 years is extremely uncertain, according to a study published by insurer T T Club and consulting firm McKinsey.
'The outlook for the 'demand side' of the industry is ambiguous. A few trends point to faster growth but other trends point to a slowdown. And one's point of view on the question can be easily shaped by the evidence considered,' said the authors of 'Brave new world' - What industry leaders really think the future holds for container transport.
The report does come to five broad conclusions: The physical infrastructure of container shipping is unlikely to change - the container and the ships will continue to exist and 'won't be displaced by 'sci-fi' concepts like autonomous floating containers or undersea hyperloops,' reported American Shipper.
'Trade flows will become more balanced across trade lanes as incomes converge between East Asia and developed economies, and the emerging economies in South Asia and Africa 'catch up.''
Automation will be broadly adopted, 'especially on the landside in ports, terminals, rail and trucking, to unlock significant efficiencies.'
Digital, data and analytics will cause a fundamental shift in the sources of value creation and customers will expect a high level of reliability, transparency and user-friendliness.
Industry leaders in 2043 will look very different; some will consolidate, others may change their business model. Some will be 'digital natives,' either startups or e-commerce players optimising the container transport leg of their supply chain.
The wave of mergers and acquisitions means that the market share of the three largest container carriers has risen from 26 per cent in 2000 to 47 per cent in 2017, but the authors say: ''This is still a far cry from the 70 per cent market share of the three largest airlines in the US domestic market or the 90 per cent share of the three largest international express package companies.
'Barring regulatory pushback, the logic of consolidation remains valid in the liner segment. For example, timing capacity additions to demand becomes easier in a more concentrated market, helping reduce the rate volatility caused by supply/demand mismatches.'
They also say consolidation could be attractive in ocean freight forwarding where they say the top three players have a 24 per cent share and in the container terminal business where the top three have a 34 per cent share.
Over the past 60 years, the report notes that many commodities that could be containerised already have been. In addition, many goods have been miniaturised or redesigned to take less space. The report makes an example of flat screen televisions and knock down furniture.
It suggests: 'The future of containerisation then will be decided by how 'mid-containerized' commodities evolve.' For example, it says automobiles were 18 per cent in 2000, but rose to 25 per cent in 2005 and remain at that level. Competition for that business with operators of roll-on/roll-off ships 'is fierce,' but even hypothetical full containerisation would only result in a four per cent increase in volume.
The report says there is scope for greater use of containers to transport agricultural products, including produce.
It also says there is opportunity for more 'through transport' of goods, noting that much cargo originating in China is stuffed in containers only when it nears the port, and on the other side of the Pacific Ocean: '90 per cent of containers arriving in Los Angeles/Long Beach are destined for the inland, but half of these are opened, destuffed and transloaded in the port area itself.'
In some developing countries, roads can't accommodate trucks hauling containers, so goods are transferred into small trucks. Better roads could create more opportunity for through transport. The report also says autonomous trucks could make the through-transport move simpler and cheaper.
'The outlook for the 'demand side' of the industry is ambiguous. A few trends point to faster growth but other trends point to a slowdown. And one's point of view on the question can be easily shaped by the evidence considered,' said the authors of 'Brave new world' - What industry leaders really think the future holds for container transport.
The report does come to five broad conclusions: The physical infrastructure of container shipping is unlikely to change - the container and the ships will continue to exist and 'won't be displaced by 'sci-fi' concepts like autonomous floating containers or undersea hyperloops,' reported American Shipper.
'Trade flows will become more balanced across trade lanes as incomes converge between East Asia and developed economies, and the emerging economies in South Asia and Africa 'catch up.''
Automation will be broadly adopted, 'especially on the landside in ports, terminals, rail and trucking, to unlock significant efficiencies.'
Digital, data and analytics will cause a fundamental shift in the sources of value creation and customers will expect a high level of reliability, transparency and user-friendliness.
Industry leaders in 2043 will look very different; some will consolidate, others may change their business model. Some will be 'digital natives,' either startups or e-commerce players optimising the container transport leg of their supply chain.
The wave of mergers and acquisitions means that the market share of the three largest container carriers has risen from 26 per cent in 2000 to 47 per cent in 2017, but the authors say: ''This is still a far cry from the 70 per cent market share of the three largest airlines in the US domestic market or the 90 per cent share of the three largest international express package companies.
'Barring regulatory pushback, the logic of consolidation remains valid in the liner segment. For example, timing capacity additions to demand becomes easier in a more concentrated market, helping reduce the rate volatility caused by supply/demand mismatches.'
They also say consolidation could be attractive in ocean freight forwarding where they say the top three players have a 24 per cent share and in the container terminal business where the top three have a 34 per cent share.
Over the past 60 years, the report notes that many commodities that could be containerised already have been. In addition, many goods have been miniaturised or redesigned to take less space. The report makes an example of flat screen televisions and knock down furniture.
It suggests: 'The future of containerisation then will be decided by how 'mid-containerized' commodities evolve.' For example, it says automobiles were 18 per cent in 2000, but rose to 25 per cent in 2005 and remain at that level. Competition for that business with operators of roll-on/roll-off ships 'is fierce,' but even hypothetical full containerisation would only result in a four per cent increase in volume.
The report says there is scope for greater use of containers to transport agricultural products, including produce.
It also says there is opportunity for more 'through transport' of goods, noting that much cargo originating in China is stuffed in containers only when it nears the port, and on the other side of the Pacific Ocean: '90 per cent of containers arriving in Los Angeles/Long Beach are destined for the inland, but half of these are opened, destuffed and transloaded in the port area itself.'
In some developing countries, roads can't accommodate trucks hauling containers, so goods are transferred into small trucks. Better roads could create more opportunity for through transport. The report also says autonomous trucks could make the through-transport move simpler and cheaper.