- How Is Growth Measured In The Shipping Industry
- Shipping Is A Growing Industry
- Factors Determining Growth In Shipping
- Development In Low And Middle-Income Countries (Lmic)
- Improved Logistics
- Potential Issues Slowing Growth In Shipping
- Labor Shortages
- Unforeseen Circumstances
- Final Thoughts
The shipping industry has experienced its fair share of problems in recent times. Shipping was put under immense pressure during the pandemic, and in the years since, things have not been smooth sailing.
Shipping has faced issues caused by disruptions to supply lines, geopolitical challenges, labor shortages, and increased pressure to decarbonize from governing bodies and consumers.
However, many issues plaguing the shipping industry will be resolved in the coming years. This is due to improved cooperation between nations, government funding, and more efficient supply lines. This begs the question, will the shipping industry grow or decline in the future?
Continue reading to explore the potential growth in the shipping industry in the coming years. You will learn about how change is determined in the shipping industry and the factors that can impede or assist in growing the industry.
How is Growth Measured in the Shipping Industry
The global shipping industry is vast and deeply complicated. Shipping reaches almost every country on Earth and is essential to most coastal countries' economies and trade.
Shipping is responsible for most goods reaching consumers from manufacturers all over the world; as such, without the intricate web of global shipping, modern life as we know it would not be the same.
Since shipping is a complex beast full of complications, intricacy, and a vast number of different countries and companies, each with its age, measuring the scale of the industry is challenging. You can't rely simply on the value of goods being traded, nor can you rely on the quantity alone either.
For example, a shipment of 1 million diamonds might be worth hundreds of millions of dollars, but they may all fit into a couple of cargo crates. So, while the value of the shipment is high, the amount of space taken up on a ship and the cost of transporting them is relatively low, having little impact on the industry.
In contrast, 1 million pillows could be worth millions of dollars. Still, they may need dozens of 40ft containers to carry them, increasing the cost of shipping and significantly impacting the industry's growth.
The size, scale, and quantity of ships used to carry goods is another important marker for expected growth in the industry. The same applies to construction needs, global trade, ship operations, employment, and other factors.
Luckily, the International Maritime Organization tracks everything to do with the global shipping industry and makes predictions for the industry's future based on their measurements.
Shipping is a Growing Industry
The IMO predicts high growth in the global shipping industry, with estimates of 50% to 115% growth in annual world shipping trade by 2050. This growth is significant and even outpaces other high-growth sectors and is very promising for the shipping industry as a whole.
This extensive growth in the shipping industry applies to global trade, not domestic shipping industries. The shipping industry is expected to see more modest growth rates in developed nations like the US. It could even decline in size depending on how the industry can adapt to changing customer expectations and government regulations.
Factors Determining Growth in Shipping
There are a vast number of factors that can heavily influence the rate of growth in the shipping industry. The shipping industry is affected by everything from how quickly goods can pass through ports to how much stuff consumers want to buy daily. The factors most likely to heavily influence the growth of the shipping industry are as follows:
Much like every other industry, shipping is propelled forward by innovative technology being introduced. Technology can improve everything from the speeds that goods take to ship to logistics and even working conditions. As a result, the growth rate in shipping is intrinsically tied to innovations in the industry.
Here are some technologies that, when widely adopted by the shipping industry, could accelerate growth:
- Autonomous driving and cargo handling-- Autonomous driving is expected to improve the efficiency of ships while out at sea, reduce the risk of accidents, and cut operations costs, spurring the industry toward growth.
- Internet of Things-- IoT is expected to significantly improve the efficiency of handling goods and managing inventories. This will reduce port congestion and reduce inefficiencies in the industry.
- Artificial Intelligence -- AI is coming for just about every industry, including shipping. Artificial intelligence is well suited to improve complex sectors like shipping and is set to boost productivity, cut out inefficiency, and reduce the costs of operating ships.
Development in Low and Middle-Income Countries (LMIC)
The IMO attributes its predictions for massive growth in the industry to the development of LMICs. LMICs are going through prolonged economic development and growth, meaning more people will have more money to spend on goods.
When more people purchase goods in different countries, they must ship these goods from manufacturing hubs to meet the growing demand. This means that more countries will need more ships to carry items across the sea, driving growth in the industry.
Logistics is a crucial component of global shipping and one of the industry's most significant potential issues. Technological advances are expected to quickly improve logistics and supply lines, which will foster growth in the industry.
Potential Issues Slowing Growth in Shipping
While several factors drive growth in the global shipping industry, several issues could hinder growth over the next decade. Here are some of the biggest challenges the shipping industry needs to overcome to continue growing:
Perhaps the biggest challenge that shipping needs to overcome is its reliance on fossil fuels. Almost all large cargo ships currently operate on oil or other fossil fuels, contributing 2% to 3% of all carbon emissions globally.
The IMO, significant governments, and large shipping companies have pledged to reduce their emissions and reach net zero by 2050. This goal is ambitious, and it requires the shipping industry to make several expensive changes to how ships and ports operate to achieve this goal.
These expensive changes will hinder the industry from making the same profits as before and could slow the expected growth rate. This is especially true in developed nations like the US.
Shipping is currently under immense pressure due to shortages in workers. Ports in the US are generally understaffed due to poor working conditions, low pay, and the dangerous nature of handling goods and using heavy equipment. These labor shortages could contribute to port congestion and reduce the number of ships in operation, slowing the industry's growth rate.
However, it's worth noting that the emergence of autonomous vehicles and AI could ease the labor shortage issues in the coming years.
The shipping industry is susceptible to significant disruptions or trade changes between countries. Looking only to recent years to find clear-cut examples of unforeseen issues disrupting global shipping would be best. COVID-19 nearly decimated international shipping in the first few months of the pandemic; it then caused a surge in demand, putting the industry under enormous pressure.
Geopolitics also influences global shipping, with widespread disruption emerging after Russia invaded Ukraine, which required significant changes to supply lines. If any further disasters, pandemics, or significant conflicts happen over the coming decades, it could significantly affect how ships operate and disrupt the growth in the global shipping trade.
The global shipping industry has hit rough waters over the past few years. COVID-19, geopolitics, and logistical bottlenecks have made international shipping hard in recent years, though the related issues are currently easing thanks to shifts in supply chains. With increases in development in smaller nations, the shipping industry is poised for significant economic growth over the next few decades, provided the industry can overcome the challenges posed by the need for decarbonization.
If you need to ship goods overseas, you should trust the expertise of a company with a proven track record of success. With the turbulent times ahead in the industry, choosing a company that knows how to operate in good times and bad is crucial for ensuring the safe delivery of your goods.
A1 Auto Transport has over three decades of experience moving vehicles and goods across over 190 countries. We are experts in providing reliable international shipping, and we have the knowledge needed to anticipate and adapt to new challenges in the industry. Contact us today to learn more about our shipping services and get a free quote.