Consultant McKinsey has issued a report looking at container shipping 50 years from now, a time when it predicts ships will be autonomous and capable of carrying up to 50,000 teu.
By 2067, McKinsey predicts autonomous 50,000 teu ships will plow the seas, perhaps alongside modular, drone-like floating containers — in a world where the volume of container trade is anything from two to five times greater than it is today.
In terms of scale, the current record breaking 22,000 teu ships under construction for MSC and CMA CGM could be dwarfed in years to come, McKinsey believed.
“On balance, we do not view 20,000 TEUs as the natural end point for container ships—50,000-TEU ones are not unthinkable in the next half-century. However, progress will probably be much slower than it was in the past decade: overcapacity means that new ordering will be slower over the next five to ten years. Lower slot costs materialize only when demand fills up larger ships, which hasn’t happened recently. But if demand catches up with supply, as it may well do in the early 2020s, the logic of scale will once again drive orders for bigger and bigger ships,” the consultants wrote, while admitting that returns to scale decline with increasing size, so a move from 20,000 to 40,000 teu would not reduce unit costs as much as a move from 10,000 to 20,000 teu.
Short-haul intra-regional traffic will increase, the consultants suggest, as manufacturing footprints disperse more widely because of converging global incomes and the increasing use of automation and robotics. Container flows in East and Southeast Asia will continue to be huge, and the second most significant tradelane may link that region to Africa, with a stopover in South Asia.
On further consolidation within the sector, McKinsey predicts: “After multiple value-destroying cycles of overcapacity and consolidation, three or four major container-shipping companies might emerge. These businesses could be either digitally enabled independents with a strong customer orientation and innovative commercial practices or small subsidiaries of tech giants seamlessly blending the digital and physical realms.”
Fifty years from now, McKinsey suggests freight forwarders might not exist.
“Freight forwarding as a stand-alone business will be virtually extinct, since digital interactions will have reduced the need for intermediaries to manage logistics services for multiple participants in the value chain. Across the industry, all winners will have fully digitized their customer interactions and operating systems and will be closely connected via data ecosystems,” the report noted.
The McKinsey report has been greeted with some caution by some. Notably, Dr Roar Adland, shipping chair professor at the Norwegian School of Economics and an occasional Splash contributor, asked via LinkedIn: “If automation/digitization brings more local production then why would you need 50,000 TEU containerships? Higher volumes, yes possibly, but lower distances and a more distributed network = smaller energy efficient vessels. Think A380 vs 787 planes.”
Adland went on to muse: “If we get autonomous ships on a large scale then they will be electric. Electric vessels will bring operating costs down to a fraction of current fuel costs and similarly make a network of smaller vessels on a more distributed network more competitive.”