Analysis: Fourth Industrial Revolution will disrupt shipping

Wolfgang Lehmacher, head of supply chain and transport industry, World Economic Forum | Oct 16, 2017 6:41AM EDT

The digital transformation that has overtaken much of the global economy is set to transform container shipping.

Wolfgang Lehmacher, head of supply chain and transport industry, World Economic Forum, outlined six trends of the Fourth Industrial Revolution that are disrupting the Shipping Industry at the JOC’s TPM Asia conference in Shenzhen.

SHENZHEN — Disruption is unavoidable for container shipping as multiple technologies converge with unprecedented speed, requiring a complete revision of strategies to deal with the opportunities and threats facing the transport industry.

In a keynote address to TPM Asia in Shenzhen, Wolfgang Lehmacher, head of supply chain and transport industry at the World Economic Forum, described six trends caused by what is known as the Forth Industrial Revolution (4IR) that is disrupting world shipping.

“The world will significantly change,” he said. “The shipping industry has been impacted by the previous industrial revolutions: It moved from sail-powered shipping to steam-powered shipping in the First Industrial Revolution, to oil-powered shipping in the Second, to satellite guided navigation and digital transport in the Third. The [4IR] is expected to bring to the sector networks of autonomous vehicles.”

Lehmacher quoted World Economic Forum founder and executive chairman Klaus Schwab, who said, “The changes unleashed by the [4IR] are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril.”

Although disruption would be unavoidable, Lehmacher said in the past, it came largely from within the industry where new players with new technologies took market share from less advanced players.

“In the 4IR, not only the changes within shipping, but also the changes in other industries will have significant impact. Let’s take the automotive industry. The move towards electric vehicles will disrupt the world in a big way. Electric vehicles have less moving parts and run more mileage than combustion engine powered vehicles. This means less maintenance, less spare parts, less cars sold, less parts and cars to be transported; of course also less oil needed, sold, and transported,” he said.

Lehmacher outlined six 4IR trends that would bring opportunities and threats to the shipping industry: digital society and platforms; visibility and transparency; advanced manufacturing; e-commerce and omni-channel; automation and electrification; and new modes, new systems.

“Society has become digital. Now, we are moving towards the experience economy. Businesses must orchestrate top class events for customers where the resulting experience, the memorized event, becomes the offer,” he said.

The shipping industry was a core component of the value chain and needed to support such orchestration, which had data management at its core. Lehmacher said it was the data that enabled the design and delivery of the offer, from the status and condition of the order to the ability to change the delivery address. Transparency and the ability to respond was part of the experience.

“While visibility is required internally, transparency is what companies make visible externally, mainly to governments, customers, and media. Visibility helps to steer, respond, anticipate, learn, plan, and share with partners to contribute to the fluidity and protection of the entire supply chain ecosystem,” he said.

A good example, Lehmacher said, was the Flex Pulse Center in San Diego from which the technology company manages its global production network with a base of about 14,000 suppliers. Thanks to advanced manufacturing technology, companies such as Flex can swiftly switch production from a shoe to a phone, from China to Mexico. This requires flexibility from all partners.

But swift responses required swift technologies, and Lehmacher said there was no other sector that adapted technology as fast as manufacturing.

“One technology that is starting to change production is 3-D printing. 3-D printing enables not only totally new designs but also manufacture-to-order in a new way. With 3-D printing, manufacturing becomes more distributed. Last year, Adidas launched its first speedfactory in Germany; an event seen by many as a major step in mass production 3-D printing, an example of more distributed manufacturing.

Lehmacher said seaports and airports were also natural entry points to markets. “They are attractive locations for cross-dock and distribution warehouses. Seaports are platforms of departure for different modes of transport, for the longhaul and last-mile delivery. New modes, from truck platoons to drones to rolling robots, need to be integrated in more traditional models.”

He said the discussion around automated transportation of cargo was no longer alien, particularly for those ports that are seeking to become mega-hubs, which have no choice but to embrace the world of automation to its maximum extent.

Existing modes of transport will change, and this will find its way into ports. “The 4IR will help the integration of new modes of transport, such as the hyperloop. Traveling at 600 mph, with a top speed of 760 mph, it will be able to carry autonomous clean vehicles, such as rolling robots. In these emerging new systems, ports need to remain the integral and pivotal part of the global world of commerce,” Lehmacher said.

Lehmacher said change would come rapidly, giving as an example the 10 years it took engine-power to replace horsepower in cities.

“The only thing which could slow down developments is cyber risk. Cyber crime could force the public and private sector to take extra precautions, which cost time and money. Nevertheless, 4IR technologies might also help to make the connected spaces resilient,” he said.

<< Go back to the previous page