Ports & Ships that Serve
So whether we are discussing the supply chain infrastructure being brought to bear, or the basis of the trades of which gave-rise-to & sustained that developmental path, the prospect of a change of direction, from both the strategic and tactical perspective, is high.
In respect of innovation, we have had little to say since questioning whether wind harvesting devices and mega-sized container ships can ever be compatible. Indeed, in the intervening period, the following report has caste into doubt the very fabric of the economies of scale argument for such ships in terms of unit energy consumption:
We do note, however, two promising trends in respect of emerging technology. The first is the general focus on the one-hand on the value of human crews in safety and security issues (as noted in our first report in respect of insurers views), and on the other the emergence of automation at sea and in-port.
At sea, the bigger-is-better scenario in the commercial trades in recent decades has concentrated upon employing similar numbers of people on ever-larger vessels to pursue economy of scale. In the military, however, at sea the long-established trend is now to employ automation to reduce tasks in all but the areas of human watch:
One wonders, in respect of the crucial issue of proliferation of new systemically compatible infrastructure, whether it would require a new Model-T, or a "Liberty Ship" if you will, in the regional shipping sector. Despite the supply-sider inclinations of the shipping yards, the financiers, and the states that stand behind them, the trades these ships would serve are already emerging through tangled existing infrastructure and despite grand statist schemes that might hinder their rise.
Indeed, perhaps evidence of the perfect scenario unfolding, in order for such a ship to emerge, is already illustrated by the recent growth of the relative share of intra-regional trades in the world economy.
We have yet, however, to exchange negatives on the prospects for the resurgence of smaller vessels and ports. Given more direct sailings & equal call frequencies at the originating port, the negatives arising are mostly cost related (unit cost per shipping container). Significant points among them include the following:
1. Ship Labour Costs
2. Ship Bunker / Fuel Costs
3. Relative / Unitised Small Port Infrastructure Cost
4. Relative / Unitised Small Port Security Cost
Setting these points aside for a moment, the way in which my thinking developed on the potential of small port developments emanated from the strategy deployed by Sears Roebuck together with their forwarder partner Fritz Companies decades ago. They had embarked upon a process they called “Supplier Management” in which they took possession of orders from disparate suppliers locally in South China, and then contracted Fritz to supervise the receipt and build of consolidated containers. Sears often confirmed the nomination of the final destination of the orders & container only at the time of documentation and loading of the container at origin. Although the orders flowed through an existing distribution centre network, the ability to intervene and nominate alternate ports of entry, or to respond to changed consumer demand scenarios, captured my attention.
Later, together with my Australian colleagues and customers, we developed a direct trade programme. We received a customer’s orders from multiple vendors at regional DC locations at overseas origin, and then shipped those orders direct to channel partners (usually retailers) throughout Australia after nominating the closest Australian port of entry.
The above enabled the possibility of avoiding not only centralised Australian DC’s, and the costs of long distance inland transportation, but the avoidance of Australian DC infrastructure all together. In some cases we developed, together with our customers, and their Australian domestic carrier partners, the ability to label packages with Australian domestic carrier labels at the origin consolidation DC. Upon arrival at the regional Australian port, we would not to open the container until discharge at the domestic carrier’s terminal; whereupon they would offload cartons directly to the terminal sortation belt for entry into their domestic transport network.
In the above scenarios, the ability to arrive at port facilities as close to consumer markets as possible, and to save transit time & defray inland costs in doing so, is to be weighed up against cost / frequency adversity in comparison to domestic transhipment over a central inbound inventory hub after the deep sea voyage. Where there was none, as in most of the Australian order trajectory scenarios, the feasibility was assured so long as the individual market’s orders could fill a shipping container at the required frequency.
So at this point we have covered the incentives for bypassing heavily centralised port hubs alongside the limiters in developing & maintaining the infrastructure that would make the bypass (or hub-skipping as we usually call it) possible. The concept of hub-skipping can further be applied to any mode of transport. Indeed I worked on the successful development of a very significant one for air transportation between Australia and New Zealand.
We had hoped to close this series today, but we find that by being fulsome we are out of time & space to do so. We are determined to close the series in part 6 with a further discussion of possibilities to defray costs when opening new possibilities to grow the “go-smaller” share of global trade in future with innovative ship and port infrastructure.