Shipping transport led into future one digital step a time, says report

August 06, 2018
Chris Wheal

Blockchain and other digital technologies may be the answer to questions the container transport industry doesn’t even realise it’s asking.

According to a report published today by Mckinsey and TT Club, the container transport industry faces a future which will look vastly different through a combination of digital, data and analytics that include blockchain.

Future of traditional shipping altered by digital trends like blockchain

‘Brave new world? – Container transport in 2043’ the international freight transport insurer, TT Club, and consulting firm McKinsey, evaluated the future of the industry through interviews with a cross section of players. The report takes a long-term view revealing where value will be created in the future (by 2043) and the likely ‘winners’ under a number of potential scenarios.

Charles Fenton, TT Club’s CEO underscored in a release: “The container transport industry faces a complex future. The industry experts in this research are generally agreed that the physical characteristics of the industry won’t change radically

He adds: “However, automation holds enormous potential; digital, data and analytics will be central to competitive dynamics, and the business models of industry leaders in 2043 could look very different from today. Digital reinvention is just one of four potential scenarios that our report envisages.  Its in-depth challenge to our perceptions of the future is well worth close consideration.”

Digital usurpers

The vision of 2043 is not a Bladerunner version of physical transformation (ships will still be ships), instead it is the current experimentation amongst the players in the industry that will carve out a future likely reliant on automation. Bringing about a significant change that links like a “conveyor belt from factory to consumer” through a more efficient containerised supply chain.

Traditional supply chain service providers may be threatened as digitally enabled services, which can directly control the flow of goods from factory to consumer, become progressively more influential.

The report highlights that newcomers may act as digital usurpers (similar to Amazon and Alibaba), applying technology to previously unsolvable challenges, or “scrappy tech start ups”, who are more nimble and able to assume an integrator role and thereby reshape the container transport industry.

Value through ‘digital reinvention’

The other scenario for the industry envisions current players finding salvation under Digital Reinvention from six suggested sources of value creation. Industry stalwarts will forego trade developments and utilise greater flexibility, resilience and optimisation and it will be consumer led.

Business models will change and industry leaders expect for example that customers may one day “come to expect guaranteed delivery at a specific time and transparency of their cargo at every stage in the process – all at a lower door-to-door price than today. They will expect a higher degree of reliability, transparency, and user-friendliness.”

The proposed saviours include: greater economies of scale, finding the customer preference for lower unit costs or greater flexibility, customer choice perhaps for faster more direct services; supply chain reliability and predictability as well as environmental performance rising to the challenges related to fuel and emissions to protect the environment.

The report states: “Digital, data and analytics have indeed become the fundamental driver of value creation. Players with significant asset footprints lead the way, with proprietary data that allows them to out-compete any potential disruptive entrant. Data and technologies like blockchain are used in creative ways and many digital native suppliers of software and analytical solutions thrive.”

And while a scenario from Bladerunner may not be in the immediate future for containerised shipping, the report expects that over 25 years, “lighter-weight materials like carbon-fibre composites may start being introduced for containers and potentially ships to reduce weight and improve tensile strength.” At least it’s a start.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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