Sustainability within logistics is expected to be taken up on a larger scale, with digitalisation and automation being prime movers of such operations, writes Huseni Vohra of Ocean Insights.
While we can say with relative certainty that we are at the tail end of the COVID-19 pandemic—courtesy of the vaccines—the consequences of the pandemic are yet to be lived through. As with several industries, the COVID-19 impact on the supply chain industry has been total. 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-based 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.
The shipping world went on to the next level of dynamism during the last quarter of 2021. In India, several containers transhipped via Mundra and Krishnapatnum ports rolled over to the second or the third vessel. On an average, in the South Asia market, the rollover ratios 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 never seen in a decade in China. With several vaccines in various stages of development and production, manufacturing centers 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 interoperation 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.
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. With the U.S. witnessing a change in administration this January, the transportation industry would likely feel the push to keep its 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.
ABOUT THE AUTHOR:
Huseni Vohra, Regional Sales Director, Ocean Insights, has been with the company since the inception of the company and was one of the first to join the business development function. He has worked and traveled internationally to widen Ocean Insights’ reach and capture new markets. He is currently heading the business development for the APAC region and curating the global lead generation function.