Tag: nearshoring

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The future of shipping and trade

Shipping and supply chains generally have experienced major problems in 2021. The global pandemic disrupted the flow of trade, and the bounce-back in the summer of 2021 saw supply chains stretched as staff shortages and physical capacity limits hit the transport of freight. Ships were held up at ports waiting for unloading and onward transportation. The just-in-time methods of delivery and stock holding were put under considerable strain.

The problems were compounded by the blockage of the Suez canal in March 2021. As the blog, JIT or Illegit stated “When the large container ship, the Ever Given, en route from Malaysia to Felixtowe, was wedged in the Suez canal for six days in March this year, the blockage caused shipping to be backed up. By day six, 367 container ships were waiting to transit the canal. The disruption to supply cost some £730m.”

Another major event in 2021 was the Glasgow COP26 climate conference and the growing willingness of countries to commit to decarbonising their economies. But whereas electricity can be generated from renewable sources, and factories and land transport, such as cars, vans and trains, can run on electricity, it is not so easy to decarbonise shipping, especially for long journeys. They cannot plug in to the grid or draw down from overhead cables. They have to carry their own fuel sources with them.

So, have the pandemic and the Ever Given incident exposed weaknesses in the global supply chain and in shipping in particular? And, if so, in what ways is shipping likely to adapt? And will the pressure to decarbonise lead to a radical rethinking of shipping and long-distance trade?

These are some of the issues considered in the podcast linked below. In it, “Shipping strategist Mark Williams tells Helen Lewis how examining the challenge of decarbonising shipping reveals a future which looks radically different to today, in a world where population, oil extraction and economic growth have all peaked, and trade is transformed”.

Listen to the podcast and have a go at the questions below which are based directly on it.

Podcast

Articles

Questions

  1. Why should we care about the shipping industry?
  2. What lessons can be drawn from the Ever Given incident?
  3. What structural changes are needed to make shipping an industry fit for the long-term demands of the global economy?
  4. Distinguish between just-in-time supply chains and just-in-case supply chains.
  5. What are ‘reshoring’ and ‘nearshoring’? How have they been driven by a growth in trade barriers?
  6. What are the implications of reshoring and nearshoring for (a) globalisation and (b) the UK’s trading position post-Brexit?
  7. What is the contribution of shipping to global greenhouse gas emissions? What other pollutants are emitted from the burning of heavy fuel oil (or ‘bunker fuel’)?
  8. What levers exist to persuade shipping companies to decarbonise their vessels?
  9. What alternative ‘green’ fuels are available to power ships?
  10. What are the difficulties in switching to such fuels?
  11. What economies of scale are there in shipping?
  12. How do the ownership patterns in shipping benefit decision making and change in the industry?
  13. Are ammonia or nuclear power the answer to the decarbonisation of shipping? What are their advantages and disadvantages?
  14. Why are President Xi’s views on the future of shipping so important?
  15. How will the decarbonisation of economies affect the demand for shipping?
  16. What is likely to happen to Chinese demand for iron ore and coking coal over the coming years? What effect will it have on shipping?
  17. How and by how much is the European Emissions Trading System likely to contribute to the decarbonisation of shipping?
  18. What is the Sea Cargo Charter? What difference is it likely to make to the decarbonisation of shipping?
  19. In what ways do cargo ships optimise productivity?
  20. What impact is slowing population growth, or even no population growth, likely to have on shipping?