^Demand-Supply Gap in Shipping can be Very Large. Image Courtesy of woaiss at ShutterStock.com
Shipping’s Shifting Sands
May you live in interesting times is an ancient Chinese curse. Shipping certainly is living in interesting times. And will do so for the coming decade and half at least. But then, international shipping is always a scene of interesting although not-so-visible developments.
Shipping transports 90% of the globally traded cargo. Simply speaking, it is the global economy that drives shipping. And the state of the global economy is subject to change without notice affected as it is by umpteen factors.
Forget these factors. Even the remote possibility of the materialization of a certain factor can cause such a change regardless of whether the expected event occurs. This is because all markets operate on the sentiment of market participants.
And this sentiment is, in turn, a manifestation of human nature – a very capricious commodity indeed. Even local markets are fickle. What then to say of the global economy, the mother of all markets?
Well, the effect of all this is that the demand for shipping to transport goods is terribly volatile. But the supply responds very slowly to demand. It takes 1-3 years to build a ship and many months to purchase one in the second-hand market.
This inherent demand-supply adjustment interval makes shipping experience prolonged and unpredictable boom-bust cycles. People inevitably order more-than-necessary ship tonnage when the future looks promising. And bleak outlooks make them scrap excessively.
It is against the backdrop of this canvass of perilously shifting sands that we must view the expected technological developments in shipping. Precisely why shipping is poised for awfully interesting times.
The Drivers of Technological Development
Technology does not develop in isolation. Even less so for shipping, linked as it is to the global economy. Technological progress is inherently connected to developments in society, politics, economy, employment, conflict, and peace.
Economy, people, and natural resources heavily affect commercial shipping. The economy and natural resources leave a potent imprint on the energy sector.
The need to rapidly, safely, and reliably transport large volumes of cargo at minimum cost has always been the incentive for technological advance in shipping. Now, there is a fresh driver – the necessity to cut all environmentally polluting discharges.
Rapid technological advances will progressively shorten the transition duration between emerging and mature technologies. Early identification of a genuinely useful technology will be propitious for shipping businesses, policy makers, and investors.
But the speed of innovation and technological change is so enormous, it is near-impossible to predict the effect of certain technologies. Disruptive innovation is the ugly side of technological progress wherein new technologies stamp out the old way of doing things.
Population explosion, increased consumption by the newly affluent middle class in developing nations, rapid technological developments, climate change, and increasing migration create fresh challenges and opportunities for shipping.
Oceans will also increasingly provide resources for food, medicines, energy, and materials as land-based resources move towards exhaustion. This will create demand for ships with the technology to exploit and transport these resources.
According to the paper The Wind of Change: Maritime Technology, Trade & Economic Development by Luigi Pascali at the University of Warwick, CAGE, Pompeu Fabra University, and Barcelona GSE:
- Widespread use of the steamship marked the first phase of trade globalization between 1870 and 1913. This is because humans were no longer dependent on wind patterns to trade goods via sail ships. Steamships slashed the time required to trade goods
This wave of globalization benefited only a small number of nations that were characterized by inclusive institutions
- Most other nations did not prosper. The reason, archaic and arbitrary executive mechanisms that dampened the pace of their economic development and globalization
History is a great teacher. We can import the following implications of this study to the present and the future:
- Cutting down transportation costs triggers trade expansion. We experienced the same after containerization of general cargo trade from the 1960s onwards
However, we must not confuse the reduction in transportation costs with a lowering of freight rates. Technology cuts transportation costs. Freight rates can fall as a result of technology as well as economic slumps and changes in market structures
- Trade amplifies a country’s prosperity. And the most prosperous countries of the present day are those with powerful institutional checks on executive power in the form of strong contract enforcement, shareholder protection, and property rights
Developed nations have such checks and balances in place. Developing countries do not. Many of their institutions are characterized by authorities with excessively discretionary and near absolute power
Eighteen Transformational Technologies
Global Marine Technology Trends 2030, a report by Lloyd’s Register, QinetiQ, and the University of Southampton outlines the following 18 technologies that will facilitate immense change in all types of shipping viz. commercial, naval, and ocean-space:
- Smart Ships: will be optimized, managed, and controlled by smart machines, not humans. In the manufacturing parlance, this replacement is called The Fourth Industrial Revolution
And revolution it is because ships will run with minimum crew and onshore support. Plus, they will automatically use analyzed data for initiating quick, effective, and proactive measures
- Sensors: measure the physical environment. By 2030, sensors will empower streamlined ship management through heightened situational awareness
These sensors may also possess cognitive skills such as natural language recognition and machine learning. And they will do so while consuming less power and being smarter, smaller, more standardized, cheaper, and better integrated with other sensors
- Autonomous Systems: will allow machines to take over dangerous and dirty responsibilities from humans. Stand-alone autonomous systems may evolve into totally automated vessels
The combination of improved situational awareness with sensors and autonomous systems replacing humans in perilous environs will open vast new exploration areas to the offshore energy industry
- Robotics: will acquire greater importance as shipping looks to boost security, safety, and productivity. Extreme applications such as disaster relief and deep ocean mining will particularly require more capable robots
Defense sector currently employs almost half of all industrial robots. Construction and inspection industries also use them in substantial numbers
By 2030, robots may possess better sensing, motion control, miniaturization, cognition, and robot-to-robot communication for tasks such as assembly, exploration, manipulation, inspection, and joint working with humans or other machines
- Big Data Analytics: will be essential to store and analyze data characterized by high volume, high velocity, and high variety. Data scientists will also try and usher in the fourth V i.e. veracity. Because inaccurate data can cause faulty and expensive errors
Better and comprehensive data analysis will permit proactive decision making on logistics, maintenance planning, competitive pricing, traffic management at ports, resource allocation, and fleet and vessel utilization
- Advanced Materials: are materials with tailor made properties. Engineers understand the properties and structure of constituent materials at the nano scale (10-9 meter) before designing them. These can be metals, polymers, ceramics, or composites
In the near future, we might get advanced materials with properties for self-cleaning, automatic shape modification, self-cleansing, better electrical conductance, and environmental sensing
- Advanced Manufacturing: processes such as additive manufacturing (3D Printing), robotic assembly, and nano technology hold mammoth potential
Not only will they cut down the time from conceptualization to manufacturing, but also slash the cost and weight of increasingly complex components
- Communications: at sea are more difficult and expensive than those over land. Seamless communications enable improved geo-positioning, disaster warning, emergency calls, marine life tracking, and personal communication
As remote operations become increasingly common in shipping, cutting edge communication technologies such as satellites and radio-communications will be more important
Propulsion and Powering: will have to keep up with the ever increasing size of ships. Large ships burn less fuel and emit less noxious gases for every unit of transported cargo
Improvements can come in the form of slower and more efficient engines, sail-assisted propulsion, hybrid propulsion systems, and hull-air lubrication
Technical and commercial compatibility will be an immense roadblock because not all solutions are technically or economically viable for all kinds of ships
Tankers and other low speed vessels, for example, cannot use certain energy saving devices. And high cost technologies are feasible with high value ships only
- Shipbuilding: will be increasingly executed via automation and the digital integration of design and construction. Advanced human-computer interfaces such as control through touch, gesture, voice, and eye movement will further trigger innovation
- Cyber and Electronic Warfare: will further intensify as malware i.e. malicious software and electronic assaults become more subtle and complex. The increased dependence of ships on software and electronic systems will aggravate this hazard
Electronic assaults deliberately distort the electromagnetic spectrum in order to disturb sensing, communication, and positioning devices. Cyber attacks target software systems to steal, disrupt, deceive, or intercept valuable data
The running battle between attacks and systemic defenses of the present day will therefore continue and acquire more sophisticated dimensions
- Human Computer Interaction (HCI): technologies eliminate the difference in the manner of working between human brains and computer processes. Smartphones that sense our needs and preferences are one such HCI technology
Speech recognition, gesture control, and eye tracking are some of the presently used HCI technologies. Intelligent personal assistants and brain-computer interfaces are expected to pick up soon
- Human Augmentation: technology enables people to recover from physical losses such as the loss of hearing, vision, limbs and other such functions
Employing bionic implants and specific drugs, the technology may boost the physical and psychological functions of healthy humans way beyond normal levels. So much so that it will be tough to tell between humans and machines
Such devices will cut down crew requirements to a bare minimum, something particularly important for naval forces. Shipping will adopt exoskeleton technologies earlier. Brain enhancers and bionic implants will come later
- Energy Management: is the production, storage, delivery, and recycling of onboard energy while the ship is at sea. This will be most important for naval vessels with high energy requirements
The need to lower generation costs and the restrictions imposed by environmental regulations will shape onboard energy production technologies. More ships are likely to use nuclear fuels
Low volume and lightweight hydrogen fuel cells will be increasingly used for energy storage. Advanced conductors and better system layouts will be used more for low-loss electrical transmission and more flexible power distribution
- Sustainable Energy Generation: from ocean waves, ocean tides, and ocean temperature and salinity differences will pick up as regulations further dis-incentivize the use of fossil fuels
Carbon Capture and Storage: apprehends carbon emissions before they enter the earth’s atmosphere and unleash their destructive prowess. The captured carbon is then stored at geological sites
If shipping were a country, it would be the sixth largest global emitter. It goes without saying that shipping has its task cut out for curtailing emissions
- Deep Ocean Mining: will catch on as land-based mines start to run dry. And as technology develops to enable such mining. Gold, silver, nickel, copper, zinc, manganese, and cobalt will be the target minerals
- Marine Biotechnology: intends to sustainably utilize the food, energy, and other biotic resources from oceans
Although it has focused more on fishing and drug development till date, we might see greater use of algae for wastewater treatment, biodiesel production, and livestock feed generation
Ships of 2030 will be digitally integrated devices that combine people, software, and hardware into one coherent entity. Infrastructure, regulations, education-training, and technological standards will have to evolve in order to be compatible with such ships.
Organizations that evolve quickly to adapt to the rapidly changing technological landscape will thrive. And because many technologies are interdependent, developments in one will trigger advances in another.
Want to know more of what the future holds for international shipping? Visit our blog. And for a practical experience in marine fabrication services, marine pipe fitting, and large scale custom metal fabrication, contact Kemplon Engineering.