“Amid supply-chain disruptions, demand contractions, and global economic uncertainty caused by the pandemic, the global economy was severely affected by a twin supply and demand shock.”
– United Nations Conference on Trade and Development (UNTDAC)
The Covid-19 pandemic has had an adverse impact on many sectors across the world, including maritime logistics. Almost all of these have had to take drastic measures to stay afloat and make quick changes to their operations to adapt to the new normal.
The United Nations Conference on Trade and Development (UNTDAC), in its review of Maritime Transport 2020, estimated a 4.1% plunge in the global maritime trade due to the unexpected disruption caused by the Covid-19 pandemic outbreak. The pandemic has also disrupted shipping networks and supply chains as the demand for maritime services had come to a temporary halt. Other tidal shifts in the global economic atmosphere, such as strained trade relations between major countries and the technological evolution, have had far-reaching effects on the maritime logistics sector.
In addition, the demand and supply patterns of consumers have a direct impact on the operations of the maritime sector, especially on shipping, since shipping and trade are an integral part of the global economy.
This is but an overview of how the winds are shifting when it comes to maritime logistics. Let us take a look at the major trends that will affect the sector in the coming years.
The unpredictability of the pandemic and all consequential events of last year necessitated a recalibration of functions and purposes in the maritime logistics sector. Here are a few logistic trends that, in our estimation, will dominate the near future.
1. Opting for Alternative Methods of Data Collection
Maritime operations are not limited to the transportation of cargo. They serve as an important source of data collection for scientists and researchers. They used data from ships traveling in different oceans in various regions of the globe for marine weather forecasts, combined with visual observations of the ship crew.
In 2020, the number of ships traveling globally was extremely scarce, which affected the amount of data collected for marine weather forecasting. It resulted in inaccurate forecasts, and a reliance on satellite-based data of the marine regions, which is not as accurate.
Since the pandemic created an informational void for close to a year, it has now caused organizations to look at alternate methods of accurate data collection, like marine weather buoys. Marine forecasters will henceforth not rely just on traveling ships for accurate data collection, but opt for other reliable sources as well.
2. Greater Focus On Decarbonization and New Emissions Standards
Since the last decade, the world has scrutinized cargo ships for their heavy oil emissions. The enforcement of controlled carbon emissions have now become strict.
The International Maritime Organization (IMO) aims to reduce the greenhouse emissions of the sector by 2050. The sulfur cap imposed by the IMO went live in 2020. Additionally, the Marine Environment Protection Committee is trying to cut carbon emissions caused by shipping by 40% in the next 10 years under the EU’s regional Emissions Trading System (ETS).
Hence, over the course of the next few years, we can expect to see the new emission standards and policies being implemented strictly. This means that all the major logistic and maritime companies will have to follow these plans and policies and adhere to their standards to ensure reduced carbon dioxide emissions.
3. Moving Towards Circular Supply Chains
The hiatus on shipping during the pandemic has made many experts realize the need to change their approach to designing shipping routes for the long-term. This has propelled a drive to adopt a different, more sustainable supply chain model to be prepared for future global emergencies.
This includes faster ocean transit time created by shortening the current supply chain structure. In addition, to adopt a more eco-friendly/green approach, maritime companies are moving towards circular supply chains, instead of the earlier linear method, to improve product longevity and boost recycling and repair.
Companies across the world are making an effort to design and develop technology that will improve fuel efficiency, reduce waste, and optimize port management to improve the supply chain efficiency. For instance, the innovative Tradebe Green Fuel, produced from mixtures of heterogeneous oil waste, is projected to reduce the energy consumption of traditional recovery processes by 50%, while creating much less carbon emissions as compared to traditional fossil fuels. Container tracking technology to reduce demurrage and delays, increase supply chain resilience, and mitigate ocean freight costs is one way companies like Ocean Insights are helping optimize maritime supply chains.
The next decade will see more such rapid advancements towards waste-elimination from supply chains and optimization of logistics processes to achieve a cyclic economy.
4. Digitalization and Automation
The turn of events over the last year has rendered traditional systems of operations outdated. There is a need for safer human intervention, that too only when necessary.
Following this line of thought, we can see that the documentation and paperwork process at ports will soon become digital, thereby leading to efficient processes and streamlined logistics operations. Moreover, technological advances will lead to increased trade volume and hence demand more updates in the sector and digitalization is the only way to maximize productivity in the future.
Automation technology will also grow rapidly over the course of the next few years, as warehouses adopt automated processes by replacing manual labor with machines and robotic systems. The use of stacking cranes, cargo handlers, and unmanned unloaders is already a practice at major international ports. In addition, ambitious research projects, such as Maritime Unmanned Navigation through Intelligence in Networks (MUNIN), are creating prototypes for advanced automated vessels, such as completely unmanned ships.
When it comes to non-creative work, automated technology performs better, reduces injuries and accidental damage as compared to human work.
Consequently, we can expect digitalization and automation to be an integral part of maritime logistics in the coming years.
5. Adjustments in Maritime Transport to Address Increased Strain on Shipping Container Capacities
The supply of goods has increased globally, and once the impact of the pandemic subsides, there will be another boost to it. With increased supply, companies will look to update the capacity of ships to meet the demands. Containers and cargo ships have increased over the last few years. Since maritime companies will want to solidify their market positions, the ship sizes will continue to grow in the future as well.
This increasing strain on container capacities has caused some shipping companies and port operators to explore potential supply chain options through inland logistics. The pandemic and its fallout have started to heighten competitive pressure among the maritime logistics companies. Furthermore, stakeholders in the maritime transport sector are now keen on tapping business opportunities to ensure profitability, relevance, and business continuity.
6. Paving the way for a Systematic Policy Response at the Global Level
The COVID-19 outbreak served as a wake-up call regarding the necessity of a systematic global policy for maritime transport and logistics, in the face of a global crisis. The first of its kind COVID-19 Task Force on Geopolitical Risks and Responses of the Sustainable Ocean Business Action Platform of the United Nations Global Compact came into existence due to this observed lack of global policy, paving the way for such future policies.
As the maritime world becomes more cohesive, we can expect to see more such emergency response documentation to enable agile and resilient maritime transport systems.
The current maritime logistic structure is becoming outdated with every passing day. Newer technologies and consumer demands highlight the need for a transformation of the sector to bring better opportunities.
The above trends can usher in a better future for the maritime logistics sector, if the industry accepts them. Data collection can be affected by rerouting of the ships, reflecting on the accuracy of maritime weather reports. Shortening supply chains can help reduce carbon emissions and prove to be helpful for the environment. Digitization and automation can help acquire a more reliable and effective workforce, if used properly. It will also reduce the need for human labor and increase efficiency, which can prove favorable in the long run.
The coming decade will see several upgrades and changes in the operations and logistics of the sector, and these trends are but a map charting out the start to dynamic progress. What are your thoughts about the trends affecting maritime logistics? Drop a comment to let us know!