Container shipping is one of the leading forces that keep trade running. It is also massive in scale, beyond what most people wouldimagine. In 2019 there were 811 million TEUs of containers handled in ports worldwide, and this number is poised to grow forreasons we will go into later. If professionals get them wrong, there will be shortages and backups until ports and shippingcompanies can get back on track after the COVID-19 pandemic.
Yet technology and progress are the other main forces driving trade. They always have been, and technology and containershipping have always been intertwined. By understanding the future of container shipping, you will understand the direction of theglobal economy.
Here are some of the biggest threats and potential changes coming to the container shipping industry:
Technology, computers, and related accessories have improved and transformed practically every other industry on the planet tosome extent.
This is also the case with container shipping and has been for some time. Just because every container is not digitaland port work still seems more mechanical than digital does not mean computers are not in play every step of the way.
Yet, howexactly is the digital world changing container shipping now? What can we expect in the future from these developments?
The massive growth of e-commerce has also driven up container shipping, as many products sold online are made overseas. Whileretail stores do the same thing, eCommerce also allows for a greater variety of products. This increases the need for more precisecontainer shipping and a wider variety of goods.
While large batches are possible, some companies are a bit more limited. Theyinstead choose to order in smaller runs and have them shipped overseas. As more companies do this, it will be more common andaffordable for companies to do.
Greater throughput for container shipping can help with these options. It allows for more container ships to be on the move at anypoint and allowing for faster transport of goods. Barring a shortage of vessels, the more goods on the move due to eCommerce,the better things are for eCommerce businesses.
What might also be interesting is international shipping and its relationship to eCommerce. As customers might buy directly fromoverseas, will shipping containers and the like be used to transport goods more? Will shipping companies take the reins? Willexpensive but reliable international postage hold strong? It’s a complicated topic, but one to watch.
The margin for error in logistics is getting smaller and smaller. Many companies now prefer not to have a large surplus of goodssitting in a warehouse, cutting into costs. This means that it is vital for companies to know when shipments are coming in and ifthere will be any expected delays.
For some items, even a week or two off-schedule can mean a shortage for customers. Thesecustomers will then either get frustrated or shop somewhere else.
The exact developments can and will occur in many ways. Yet, improved GPS and tracking mechanisms will be a priority forshipping companies across the world.
We are not talking about virtual ships and containers here yet. Instead, we are talking about ships and containers that have beenmodernized with the latest technology.
Doing so will facilitate better tracking and allow captains and engineers to notice potentialstructural problems before becoming an emergency, and providing better environmental control.
Improvements to tracking and containers can help with customs clearance. More containers coming into international portsmeans it takes more work to process everything.
The exact changes and developments that could happen will undoubtedly vary based on the port and the country, but they willoccur as global standards move forward.
The good news is that there are things that will make processes quicker, including theelectronic payment of fees, taxes, and duties, which will speed things along.
Electronic help can also make the release ofshipments quicker. Whether the confidence exists in technology to verify paperwork etc., remains to be seen, though it could bean option (or an aid) moving forward.
Alternatively, we might see changes on the government side of things as shipping becomes an even more vital part of theeconomy. It is dependent on several other factors, most of which are unforeseeable, but the trend might go towards more openborders if shipping is to grow.
Automation is a tricky subject to pin down, especially when it comes to container shipping. While there are ways we can defineautomation in other industries, shipping for a long time to come will be driven by human input and practice paired with incrediblypowerful machines and tools.
Due to the size, strength, and expense of those machines, ports and shipping companies may wishto keep a human being in the driver’s seat for a few decades to come.
However, that is not to say that automation will not make things much easier for port workers and ship crews. Instead of fullyautomated solutions, we will likely see hybrid solutions that reduce user error and provide additional feedback and information tothe operator. While incidents are uncommon, with the right help, they can become a thing of the past, or at least those which resultin injury or death.
When more automation does come around in full, it may come in several forms. For example, there could be automated cranes (orautomation-assisted cranes) loading or unlocking shipping containers. Improved automated tracking of containers can help theclient see their goods sooner.
Automated inspection of containers for defects can prevent accidents. Better sensors and camerascombined with artificial intelligence can help process shipments. They can also provide more data on the condition of goods.
The loading and unloading of containers might also receive some help from automation in the future. Automated or remoteforklifts might be a thing of the future, as will drones that might be able to handle smaller tasks or get an aerial view.
Cameras cando quite a bit from the ground or attached to equipment, but there will need to be a balance. Workers will likely need to readjust tothe new norm, but it will be a more efficient and overall safer container shipping process for everyone involved.
If we were to look at the number of goods transported each year, measured in twenty-foot equivalent units (TEUs), we would see asteady increase, with some years still being better than others.
This is a natural response to increased globalization andconsumption (more on that later), and we can still see the trend shown below continuing.
Note that due to the COVID-19 pandemic, production and demand may have temporarily shrunk. While this has a real effect oncontainer shipping and the economy as a whole, it does not yet showcase a change to container shipping itself. The pandemic willend or stabilize, and people will likely return to business as usual.
As much as anything else over the last century, globalization has shaped our world, culture, and most of our industry. Borders areloosening as far as trade is concerned.
Of course, things such as trade wars and protectionist policies can come around from timeto time, meaning some countries have a reduced market presence, but the overall trend is towards more trade.
While there are ups and downs in countries, the overall arc of the world economically is optimistic. More countries aremodernizing, and more people can afford more advanced goods and luxury items, so society is adjusting to support this.
We do not wish to delve too much into the complex mechanisms of international markets in this article (though it’s a fascinatingsubject). We can say that there is a trend towards globalization, as we mentioned, and that there will be no shortage of needs andwants.
The population is still expanding, and in the countries where this is happening, the local supply can’t keep up with somegoods. The transport of food products alone will be enough to keep shipping companies going for some time.
Industry in expanding markets will require the transport of industrial materials and goods, with foreign investors happy to try andfind additional profits in these markets. The exact rate of growth and the precise locations will be hard to pin down. Nonetheless,there is no reason to believe it will not happen.
More “stuff” is being produced than at any other point in human history. Specific products might not keep up and will fall by thewayside, but this has always been the case and always will be the case. Instead, the new takes hold, and everyone in the modernworld wants the latest product or gadget. Consumerism drives much, for good or for ill. As mentioned before, more people willhave the funds for more consumer goods in the near future.
Furthermore, more shipping containers are always being produced. In part to replace the shipping containers that get retired orresold to the used shipping container market (they have more uses than you might think) and partially to help ensure that there areenough containers to go around.
We may not see more advanced containers right away, but even a slight design change couldmean improvements to the container shipping industry as a whole.
Of course, it will also matter where the production is occurring. Some countries and companies are moving away from China astensions rise and other countries can provide better opportunities or better products. While, in many ways, this will not affectcontainer shipping, it may impact many of the routes and the length of routes taken. Even a few hundred-miles difference is vastwhen comparing routes. In addition, fuel costs and crew needs will need to be reevaluated.
With increased international trade, the map of routes may look different in terms of traffic. If more companies invest in Africa,Thailand, India, Vietnam, etc., for manufacturing and expand into those markets, we will see ports in those areas get moreattention. In turn, this will affect how often some routes are used, which could affect logistics in several regions. We will likely evensee the expansion of those ports to accommodate increased traffic.
The increased traffic will not affect much out on the open ocean, but it can impact the chokepoints that many ships rely on to getto their destinations.
Think back, for example, to the Suez Canal and the recent incident there, which held back shipping traffic.That one event had a significant impact on world trade. Even if one widens canals, such events may be more impactful dependingon how routes are used.
While there are changes to the world, ports, and more driving the industry, container ships are also evolving. While in concept, theymight not have changed for some time, constant improvements and additions are being made so that ships and companies canremain competitive in a market that relies on razor-thin margins and perfect timing.
While this has not always been the case,demands and efforts to keep consumer goods low have meant these improvements are happening for better or worse.
As engineering evolves and better building materials become more widely available, we are like to see more super container ships in general, allowing for the more effcient transport of containers.
Engineers are always looking to push the limits (safely, of course) with shipping in general. Even the most minor design improvements can yeld results.
For example, some of the largest ships built now have the capacity for over 20,000 containers. Try for a moment imagine the size of a vessel required to carry that many containers. Then, think of the engineering necessary to make sure that such a shipdoes not sink. Such a thing would not have been thinkable a hundred or even fifty years ago.
One of the big developments in container shipping is the potential use of liquified natural gas as a fuel source. It is a fossil fuel andhas some of the same detrimental effects on the environment as currently used fuels.
However, it gives off 25 percent feweremissions than most others. This can make a huge difference. It means that more trips can be made with the same impact, buyingthe planet more time while humanity figures out what it wants to do about a growing climate crisis.
In truth, we are unlikely to see a complete refitting of container ships to use liquified natural gas in the future. However,manufacturers may build future ships to use the fuel, and it might be a good alternative if diesel or other fuels prices rise tounacceptable levels.
The cost of refitting on a massive scale is just too great, and there are disadvantages to be mindful of. Somespecialist ships may utilize liquified natural gas, but most will be experimental in nature.
Regardless of how much this fuel type is used, it is a step towards a trend of alternative fuel sources and more environmentallyconscious shipping. Notably, however, there is already a super container ship that runs on it: the CMA CGM Jacques Saadé.
The industry is increasingly environmentally conscious, and ships are being designed to be more fuel-efficient. Lower carbon fuels,as described above, are an option.
However, ship designers are also looking into hull shapes, more efficient propellers, betterlogistics, and ship options. They are even looking into things such as ship coatings and cushions to reduce friction. Research isbeing conducted to this effect on multiple fronts.
Some of these solutions may seem minor or insignificant when considering the size of these ships and the volume of fuel they use.Yet note that even a one or two-percent reduction in fuel usage makes a huge difference to the environment, given the amount ofshipping that occurs worldwide.
A 10 percent reduction in emissions can make up for years. Fewer trips and less consumptionmight still be the best way to help the environment, but this is unlikely to happen anytime soon.
On top of the above developments, ship designers are looking at other ways to use renewable energy sources to propel the ship orto help reduce energy usage overall. Given their size, they are effectively small villages or towns at sea, and they have the powerneeds of one.
In addition to reducing the need through improved technologies, ships can also seek to create more power on shipsthrough renewable means.
Significantly, these goals do not only help the environment but also save costs. If such installations are done correctly andefficiently, solar panels and wind turbines on a ship can also be an excellent investment.
They cut down on fuel costs (and relatedexpenses) over time and potentially make longer journeys possible and more efficient (fuel is heavy to carry around, after all).
The true challenge lies in finding solar panels and wind turbines that fit on a ship and are worth the initial investment. Modifying aship to such an extent is no easy task, and the weather and other conditions must be taken into account. The changes to ships arelikely to occur over time.
As more processes become digital, we are likely to see more management of the ship done digitally. More can be controlled by acomputer than many people realize.
Specialized systems allow a ship’s crew to know what is going on at any time and respond allthe faster for it. The sooner a problem is acknowledged, the less of a disturbance it will be to shipping operations.
Furthermore, better communication and instant information also allow ports to operate in a much more efficient manner. Shipscan get in and out more efficiently, and ports can ready workers and equipment to load and unload ships to the minute. You caneven speed up even things such as refueling and maintenance to some degree.
Clients are concerned about their cargo and when it will arrive. However, ships move as fast as they can and are generally alreadydoing their best.
Competition between ships and shipping companies does lead to some innovation, and this is especially the casein customer service.
Some services to be offered or expanded might include:
- Real-time tracking of shipments and ship location (within reason, GPS coordinates might not be perfect, and there aresecurity concerns).
- Faster processing and paperwork handling to save more time for clients.
- Digital warehousing allowing for more control over the goods. This is more likely with full-service shipping companies.
There may also be additional services in the future depending on the future needs of the client. If a shipping company does notinnovate, you can be sure that they will adapt to keep up with the competition (with likely mixed results).
All the above looks optimistic and generally positive for the shipping industry but are also concerns. Here are some of thesignificant points of worry:
- While there is little reason to expect reduced market demand for goods in general, there could be an economic downturn inthe future that affects container shipping, either reducing growth or causing a downturn in the industry. Yet, even if this werethe case, it would certainly not cripple or ruin the industry.
- While the expansion of the container shipping industry may occur, the growth of ports and the opening of new ports to meetthe needs of larger and more ships might take longer. Efficiency can only improve so much before more infrastructure isrequired. Unfortunately, ports and facilities take a lot longer to build to high standards than the economy does to shift tofavor a new location.
- Furthermore, as experienced with the Suez Canal incident, there may also be bottlenecks to contend with in the future aswell.
- While economics and industry often stay somewhat predictable and on track, politics is anything but predictable. A singleincident could change trade agreements, leading to reduced shipping to and from certain countries. An unstable world canlead to reduced global trade. This would, in turn, impact the shipping industry.
- Digitization is a positive trend in most regards. It does leave open the possibility of a cyberattack that could cause massivedamage. In 2017, Maersk suffered such an attack that cost them $300 million.
Even after looking at all the above, these topics are only the tip of the iceberg. There is so much that could happen globally toaffect the industry.
However, we can be confident it will continue and remain strong in an economy where people want a broadrange of goods from around the world.
We hope you have learned something interesting in this article and that we have piqued your curiosity to find out more. Whetheryou are most excited about green technologies, larger ships, or increased logistical capabilities, shipping will drive the worldforward.