Nearshoring - society and supply

It might be thought a reasonable reaction, after the vulnerabilities of the supply chain had been exposed by the pandemic, and given even more emphasis by interruptions to normality caused by Russia’s attack on Ukraine, and the spectacular demonstration of industry’s dependence on the Suez Canal. An increasing number of industrial movers and shakers are beginning to suggest that they should not be quite so dependent on hauling goods from the far side of the world, if they cannot rely on them arriving on time.

This view seemed to mesh with other doubts caused by the extraordinary hike last year in transport costs in the liner trades, which eroded both the certainty of a fast and regular supply of goods and the advantages enjoyed by the use of cheap manufacturers in China and elsewhere. Curiously, the lessons of a slavish dependence upon “just in time” supply and never carrying any buffer stocks were more rarely spoken about – bean counters in senior management never like to admit any fault.

But there are also more subtle societal drivers, about which those whose business is connected anywhere along the supply chain should be thinking more seriously.

Some years have passed since the arrival of a first of class giant container ship into European ports was greeted not by celebratory acclamation at this expression of advanced maritime technology, but by environmental and other activists carping about the impact of the voyage with all the “stuff” in the huge stack of laden containers. Their protests made more of an impression in the media than the elegant and deep-laden ship itself. But this was, perhaps, a sign of changing times and attitudes.

Related:Nearshoring trends on rise in Asia - Pacific

It is a societal viewpoint which has rapidly grown and is even becoming mainstream – a sort of puritanical narrative that deplores unnecessary use of the world’s resources, waste, emphasising the virtues of doing with less in the way of consumer goods and expressing general disapproval of capitalism and consumerism. It fits conveniently with ideas of “shaming” people with SUVs, or those who enjoy long-haul air travel. It is demonstrated by the promotion of veganism, calls for the banning of hydrocarbons and general campaigning against every form of atmospheric emission.

One might suggest that this is a phenomenon confined to middle-class, “Generation Z” people in the developed, industrialised areas of the world and that such ideas are not shared by those who have rather less and would like rather more. But although these are people who consume the most, but who seem determined to consume rather less, and campaign effectively for these aims , it might be suggested that there will be some negative but inexorable effect upon the growth of sea trade in the future.

And rather less subtle will be the - as yet -unquantifiable effect of significant marine fuel price increases, a consequence of the introduction of low-carbon, sustainable fuels, whatever might emerge from the refineries to power the world fleet. And maybe the message that there is a real cost to “net zero” ambition is beginning to register with the users of merchant ships, who have enjoyed, with brief interruptions, the benefits of cheap maritime transport and aligned their economic strategies accordingly. So, if you were looking for another reason to shorten your supply chain in the medium term, or encourage local manufacture of goods that currently come from far away, that will surely be on your agenda.

None of this is going to happen immediately, but it is a background trend that will be increasingly perceptible during the lifetimes of all those giant ships that are newly in service and under construction today. So, you must hope that people within the top echelons of the maritime world, in shipping and shipbuilding companies which together represent the very exemplar of derived demand, are thinking about these matters, even though they might be still dim shadows over their horizons.