As Norway celebrates 50 years of Nor-Shipping, it’s a good time to think about where shipping might be in another 50 years. In 1965 several shipping innovations were becoming reality. The first VLCC was near completion, Malcolm MacLean was finalising arrangements for the first transatlantic container service, Japan was emerging as the leading shipbuilding nation and sea trade was 1.7 billion tonnes.
When we look at the growth of sea trade since 1965, two things are apparent. The first is the speed of growth, as sea trade grew faster than the world economy. Between 1950 and 2015 world GDP grew by 3.7% per annum, but sea trade grew by 4.7%. Trade is now almost 11 billion tonnes a year, which works out at around 1.5 tonnes of imports for every man, woman and child in the world.
The second point is the bumpy trajectory (see graph). There was a spell in the 1970s and 1980s when trade did not increase significantly for a decade, thanks to a deep recession in the world economy and a sharp decline in the volume of oil traded by sea. This is a timely reminder that the shipping industry operates in a volatile environment.
The Next 50 Years
Looking ahead, the shipping industry faces a daunting task. One problem is judging how fast trade will grow. If global sea trade just increases in line with growth in population, which is heading for 10 billion in 2065, imports would reach 15 billion tonnes in that year (Scenario 1). But the imports per capita trend trebled from 0.5 tonnes per person in 1965 to an estimated 1.5 tonnes in 2015. If the upward trend continues, imports might reach 2.2 tonnes per capita by 2065 and trade 22 billion tonnes (Scenario 2). But today although the OECD countries import around 4 tonnes per capita, non-OECD imports are around 1t per capita. If they were to reach OECD levels, global sea trade would hit a total of 37 billion tonnes in 2065 (Scenario 3). Bewildering Forecast Range
So in 50 years’ time trade could be anything between 15 and 37 billion tonnes. And there are other scenarios, for example the phasing out of fossil fuels which could radically alter even this wide range. In terms of investment, on a very rough calculation, this means the industry could be spending between $1.5 and $4.5 trillion on new ships over the 50 years at today’s prices. How will shipping handle this? Since 1965 the focus has been on bigger ships, tight overheads, and an aggressive market offering little reward for innovative investment. But as the non-OECD driven world develops, with tougher targets for fuel and emissions, changes will be needed, and maybe a rethink.
Maritime Magic Carpet
So, if shipping is to play as big a part in the global economy in the next 50 years as it did in the last, it needs a new injection of maritime magic. The digital revolution, now global, offers shipping companies a unique opportunity to integrate the management of their high cost assets, improving productivity and offering new ways to manage them that tighten up the whole transport chain. Who knows, maybe that’s just the magic that’s needed. Have a nice day.