Post-pandemic maritime logistics will get a tech boost
Operational visibility and automation will be central to maritime logistics of the future, writes Huseni Vohra.
As with several industries, the impact of Covid-19 on the supply chain industry has been severe. The pandemic wreaked havoc on every segment of the value chain, forcing uncertainties within freight demand and capacity availability.
The maritime ecosystem suffered as oscillating freight volumes and grounded container lines crippled stakeholders financially, even as they lay burdened with added pandemic-driven expenses over worker health and safety. However, as the pandemic’s first wave subsided and economies reopened for business, pent-up demand came rushing back, peaking at the year-end holiday season.
The sustained increase in container demand on trans-Pacific and Asia-Europe lanes saw freight rates more than double their usual levels. As carriers struggled to get empty containers back to Asia, cargo rollovers continued to increase globally across all major transshipment ports.
Vaccines drive container trade
The shipping world went on to the next level of dynamism during the last quarter of 2020. In India, several containers transhipped via Mundra and Krishnapatnam ports in India rolled over to the second or the third vessel. On average, the rollover ratios in the South Asia market tend to increase by the second half of the year. However, the steep rise in demand after the lockdown effect needs to be factored in as well.
An earlier-than-anticipated recovery saw Chinese manufacturing back on track in the second half of 2020, posting a 54.9 on its Purchasing Managers’ Index (PMI) in November—numbers not observed in China in a decade. With several vaccines in various stages of development and production, manufacturing centres across other countries that currently suffer from the pandemic will reopen in the first half of 2021, streamlining global container trade and stabilising ocean freight rates.
That said, the impact of Covid-19 would inevitably strengthen several technological trends within the maritime ecosystem, like automation. Port automation trends are accelerating, buoyed by bottlenecks faced during the peak pandemic season due to lack of adequate workforce. Aside from reducing the overarching labor dependence, automation helps lower overall operational inefficiencies and increase safety and terminal productivity.
The need for data-based insights is not lost on the industry, as maritime stakeholders increasingly recognise the ‘technology edge’ that data analytics brings to logistics operations. Segments like data intelligence and cloud-based technology that have mushroomed over the last few years will continue to gain relevance within the industry. The Internet of Things (IoT) technology is now ubiquitously used across supply chains, as they provide stakeholders real-time visibility into freight movement and its immediate environment.
Operational visibility has been elusive within supply chains, primarily due to companies working in complete siloes and skeptical of sharing data amongst other stakeholders in the value chain. The interest in data intelligence has fostered supply chain connectivity, with several consortiums created within maritime networks, notably bound by blockchain technology.
Blockchain consortiums like the Maersk-IBM venture TradeLens put interoperational visibility under greater focus. TradeLens meshes together a network of cargo owners, container lines, freight forwarders, ports, and other associated stakeholders, creating an ecosystem that builds trust implicitly through a decentralised ledger system.
Sustainability will be in focus
As large swathes of the transportation corridor stayed idle in early 2020, the world could concretely envision the positive impact consistently low carbon emissions can have on the environment. After the change in administration in the United States this January, the transportation industry would likely feel the push to keep their carbon footprint low.
Sustainability within logistics is expected to be taken up on a larger scale, with digitalisation and automation being prime movers of such operations. Ports and terminals are some of the largest nucleated sources of carbon emission within the logistics ecosystem. The situation is worsened as major ports often find themselves close to densely populated cities, strengthening their need to oversee ‘greener’ operations next year. This could be done by general electrification of terminal cargo handling equipment like cranes and forklifts.
Overall, 2021 would define how global economies break free from the pandemic’s shackles. As the proverbial ‘mid-mile’ of supply chains, the maritime industry will have to rise to the occasion. In many ways, the pandemic served as a wake-up call to maritime logistics, hastening the adoption of technology in an industry mired in archaic operations. Visibility would be a defining theme, with stakeholders across the value chain leading concerted efforts to effect change and eliminate opacity-related inefficiencies.
Author: Huseni Vohra is Regional Sales Director, Ocean Insights, which supplies real-time tracking data and market analysis to large shippers.