The shipping industry is an integral part of the transportation sector and the overall supply chain. Shipping moves goods across geolocations promptly, driving the economy toward a progressive path. The volume of cargo that ships carry is huge compared to other transportation modes, offering very significant economic advantages.

Dry bulk, containers, and oil tankers are three markets the shipping industry caters to depending on the cargo. Dry bulk shipping refers to the movement of commodities in bulk, such as iron ore, coal, grain, sugar, salt, cement, steel products (coils, plates, and rods), lumber, and other minor bulks. Break bulk cargo is goods that are relatively bigger than a container. Examples of break bulk cargo are wood, rolls of steel, and parts of wind turbines. In the containers segment, reefer containers carry refrigerated payloads, such as meats, fruits, vegetables, dairy products, chemicals, and pharmaceuticals. Oil tankers, as the name suggests, transport crude oil and related products. Commercial ships, largely, operate on a time-charter basis. Passenger ships, such as ferryboats and cruise lines, run on a voyage-trip basis. Overall product size, cost per cubic meter of cargo, and weight per metric ton determine the shipping cost.

Challenges

The COVID-19 crisis has profoundly affected the shipping industry, which has almost come to a standstill. Restrictions to the movement of goods and people have affected all international shipping companies’ financial performances with a significant slump in demand for goods and its transportation in the supply chain. Logistics chains face huge losses from the disruption caused by the COVID-19 pandemic on both the supply and demand side. The shutdown of factories and scarcity of labor to load and unload cargo, and drivers to operate trucks, has paralyzed trade and smooth functioning port operations. Globally, the volume has gone down by more than 15 percent and is likely to drop further along with challenges of ports congestion and increasing turnaround time. Mandatory regulatory compliance, such as IMO 2020, is the top priority for all shipping companies. Simply, IMO 2020 is part of a sustainability focus on reducing sulfur content besides carbon. Noncompliance will make the companies ineligible for insurances and claims, leading to the withdrawal of the ship’s MARPOL (Marine pollution) certificate.

Other challenges, such as geopolitics, trade wars, sanctions, and macro-economic factors (exchange rate volatility, a sudden increase in oil prices), influence operating costs and profits. The ability of hackers to remotely control port operations is an alarming challenge from a security standpoint. The effectiveness of remote container management for monitoring temperature, humidity, and O₂ and CO₂ within containers is a significant challenge.

The way forward

Shipping companies embracing digital technologies is the way forward. Logistics are becoming more and more complex. Supply chain digitalization will increase the scale of transportation and allow for optimization of existing infrastructure. Closer insights into inventory status and transport flows will help companies further optimize their supply chains and make them more flexible. Intermodal transport, connections to the hinterland, and port-centric logistics are critical from an end-to-end supply chain standpoint. Leveraging drones for inspection of damaged parts will increase efficiency. The Internet of Clean will be the new norm post-COVID-19 for warehouses, bunkers, and ports. The preparation of giant container ships capable of handling more container units is expected to continue in the next 15 years. Larger ships require more depth and wider docks for berthing and stronger and larger cranes for port activities. Increased automation via autonomous material handling robots reduces human dependency and manual errors and improves efficiency and reliability. As environmental regulations become more comprehensive and stringent, energy efficiency, recycling, sustainability, and carbon disclosure will be vital measurements for ports.

Finally, 3D printing is becoming very relevant for shipping companies from a cost savings, efficiency, and sustainability perspective. Digital inventory and the on-demand localized manufacturing of marine parts are becoming very significant. Blockchain-enabled tracking of shipping conditions will help maintain expected temperatures and humidity ranges. Improvements in cold-chain solutions are getting a lot of traction with temperature-controlled Internet of Lights (ambient outside temperature-based optimization). Continuous monitoring and predictive analytics for estimating overall reefer cargo health with real-time alerts help improve shipping’s overall efficiency and reliability with cost savings.

References

1. https://www.ship-technology.com/features/impact-of-covid-19-on-shipping/
2. http://www.imo.org/en/MediaCentre/HotTopics/Pages/Sulphur-2020.aspx

Muralikrishnan

Principal Consultant and Client Solution of Consumer Business

Murali is a principal consultant and client solution SPOC of consumer business for the Industrial Engineering Team in the EMEA region. He has rich retail, manufacturing, transportation, supply chain, omnichannel B2B, and eCommerce experience. He has played a pivotal role in the success of large transformation programs and customer wins. Murali can reached at muralikrishnan.20@wipro.com