A cocktail of technologies and techniques for a revolution in shipping

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This article is part of the essay series “Sagarmanthan Edit 2024”

The world of shipping is on the cusp of a paradigm shift as geostrategic realities shift and amidst quickening technological changes. Envisioning how to remain relevant in this new maritime world will be critical.

One way to do this is to lead a successful revolution in shipping. This will require out-performing “heavily subsidised” and government-directed shipbuilding and shipping industries. Doing so requires changing the paradigm of modern logistics through a “blue ocean strategy”^[i]—a multifaceted approach that creates new market space rather than continuing to compete in a conventional way. The past helps point the way ahead.

The last maritime paradigm shift was thanks to two innovations perfected shortly after World War II: Modular ship construction and containerisation of cargo. Modularisation proved critical in World War II by rapidly connecting dispersed United States (US) factories, producing modules that were then assembled in shipyards. Cargo containerisation was the brainchild of Malcom McLean, who in 1956 used a repurposed wartime tanker to move 58 truck trailers.

Cargo containerisation was the brainchild of Malcom McLean, who in 1956 used a repurposed wartime tanker to move 58 truck trailers.

The next paradigm will be a new intermodalism that connects more customers across a more dispersed trade network. A key feature of this will be integrating seamlessly new and legacy means of transport by updating today’s container-dominated multimodalism. Getting started, as McLean learnt in 1956, begins with a workable vision that addresses three fundamentals of profitable shipping:

1. Less time in port: Shippers reduce the time ships spend in port while maximising overall capacity for revenue-generating freight at minimal overhead costs from port fees and longshore labour.^[ii]

2. More trade pathways: Shippers rely on timely delivery of cargo and so must have resilient shipping routes to guard against costly disruptions, such as that caused by Houthi attacks on shipping in the Red Sea. The importance of this was made most explicit when the Suez Canal was blocked by the ultra-large container vessel (ULCV) Ever Given in March 2021. That incident held up 10 percent of global maritime trade at a loss estimated at US$10 billion per day.

3. More cargo throughput: One way of achieving greater throughput is to increase cargo capacity on larger ships to take advantage of economies of scale. However, these places added the need for cranes, cargo lay-down space, and rail and road connectors to keep cargo moving off the pier. Working against #2 above is that increasing ship tonnage dramatically reduces the number of ports ships can call; the so-called “post-Panamax syndrome” for ships unable to transit the Panama Canal.

A revolution in shipping will be possible if several key technologies are employed in a new global logistics network. Five elements of this new multimodal system include:

1. Distributed production: Logistics, no matter how modern, is about moving cargo. As such, two developments are quickly altering cargo movement: One, intelligent networks leveraging Artificial Intelligence (AI) and blockchains that enable nimble port and shipping operations. Two, additive manufacturing has the potential to massively distribute points of production.

2. New cargo containers: Changing the shipping container transformed the way the world trades more than 60 years ago. A new container is needed to optimise modern trade. Case in point, container-volume utilisation hovers around 65 percent in the US.

3. Multi-mode transportation: Shifting cargo to the sea and river networks is one way to alleviate driver shortages, minimise road damage, and improve the environment. Emerging technology, such as advanced dirigibles and electric vertical take-off and landing (eVTOL) aircraft presents an opportunity to greatly expand cargo movement. If fielded, it offers opportunities to connect more markets and centres of production with little new infrastructure investment. One prototype, Lockheed Martin’s LMH-1 dirigible, can carry 21 metric tons of cargo at 77 mph for 1,400 miles. And, Aeros claims its prototype can be scaled up to carry 66 metric tons up to 3,100 miles at a speed of 120 mph.

4. Diversified port operations. Transshipment from ultra-large container ships to smaller feeder ships at sea offers a way to take advantage of cargo economies of scale. Critically, this would avoid the post-Panamax syndrome by using feeder vessels able to access more ports without port expansions and dredging.

5. Massive Stay-at-Sea Container Ships. The current champion of container ships is the China-built Ever Alot measuring 1,312 feet in length and 201 feet in width, with a 55-foot draft carrying 24,004 containers (i.e. TEU). At the same time, clean-energy goals, such as IMO 2020, mandate stringent emission rules having significant future design implications. Bigger ships and emission rules are incentivising the development of small maritime modular reactors. These offer the greenest of energies and high sustained transit speeds, without the need for refuelling during the life of the ship. Reactor designs under development today could be back-fitted into existing ships’ electrical power systems and electric-drive propulsion.

Acting on this vision requires executing a proof-of-concept demonstration to refine the concepts and business model. Such a demonstration would begin to address the innovator’s dilemma regarding forecast costs and optimised operations —“markets that don’t exist can’t be analysed.”^[iii] Moreover, a demonstration would provide important operational experience to address unexpected engineering challenges. Finally, a successful demonstration would build confidence in the approach, and thereby attract investment and government support.

Bigger ships and emission rules are incentivising the development of small maritime modular reactors.

The shipping industry is highly competitive and benefits from government backing. This makes it critical to establish a favourable environment for this novel multimodalism. This can be done by an informal group of like-minded maritime nations coordinating regulatory and commerce policies to harmonise domestic activities and facilitate the development of this multimodalism. Participants would consist of leaders in ships owned, shipbuilding capacity, or merchant mariners.

Conclusion

In the US, there is serious consideration and investment being made in elements of this new multimodalism. This has utility for nations like India, potentially unburdening communities from costly transportation and preventing greater connection to trade and economic growth.

Brent Sadler is a Senior Research Fellow with the Naval Warfare and Advanced Technology, Allison Center for National Security at The Heritage Foundation

^[i] W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and the Competition Irrelevant (Boston: Harvard Business Review Press, 2015), p. 22.

^[ii] Martin Stopford, Maritime Economics, 2nd ed. (London: Taylor & Francis, 2003), e-book location 3985–4537.

^[iii] Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston: Harvard Business Review Press, 2016), 30.

• Economics and Finance
• International Trade and Investment
• India
• innovation in shipping industry
• Intermodal transport
• intermodalism in shipping industry
• shipping industry modernization
• shipping industry technology
• technological innovation in maritime industry

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