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Medium-term demand disruption for shipping from renewables, tech developments

In the medium term shipping should expect disruption in demand across a broad swathe of markets due to shifts in energy and consumer goods production.

Speaking at Mare Forum Singapore on Tuesday, Jayendu Krishna, director – Maritime Advisors, Drewry, said that in the medium we should expect some disruption in demand across dry and liquid bulk, and container shipping.

The biggest impact is likely to come from the renewables sector which Krishna noted was yet to have much influence on dry bulk market it will come with renewables potentially impacting 20% of the dry bulk shipping market. The peak year for coal consumption globally was 2014.

“The economics of renewables have really become powerful now, that was not the case four – five years ago,” he said. The renewable energy sector has been heavily dependent on subsidies however, industry executives note that the likes of offshore wind farm projects in Europe are being develop without government subsidy.

In terms of incremental investment in the energy sector renewables now accounts for 61%. “We are really at a very critical juncture.”

But renewables may not be all bad news for shipping and Krishna noted increased demand for commodities such as bauxite. The industry has also seen the development of new classes of vessels to cater to the offshore wind sector.

The growth in use of the electric vehicles will impact the product trades with diesel and gasoline accounting for 45% - 55%. While EVs only account for 0.2% of the global vehicle fleet the number is growing with the peak for sales of internal combustion engine vehicles coming in 2017. Last year saw sales of 2m EVs with the largest number in China.

Read more: Electric vehicle growth will start hurt tanker shipping by 2025

The nearshoring of production through both 3D printing and robotics could also impact the container shipping market. While 3D printing is currently mainly confined to specific sectors such as aerospace estimates have been that it could impact as much as 40% - 50% of the consumer production market.

Krishna also noted the use of robotics in manufacturing reduces the cost effectiveness of offshore production as low cost labour is no longer an advantage and robots are more productive. “Offshoring has come down due to robots,” he said.

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