2015 Predictions: Transportation and Logistics

Stephen DeAngelis

December 15, 2014

The world is on the move. Gone are the days when a majority of humankind could walk to their jobs or lived in the vicinity of where they were born and raised without ever traveling or moving elsewhere. In today’s bustling world, getting people and goods efficiently from one place to another is a concern at every level: private, commercial, and governmental. And, of course, you can’t discuss transportation without mentioning the 600-pound gorilla in the room — transportation’s impact on the environment. Transportation issues, and the environmental concerns they raise, touch on two topics I frequently cover in this blog: the supply chain and smart cities. As a result, looking into what subject matter experts are predicting about the future of transportation and logistics is a natural addition to this series on predictions about the upcoming year. Gavin van Marle (@LoadstarGav) raises a very interesting question about how other technologies could affect the global supply chain (which, of course, would affect logistics platforms as well). “The rise of 3D printing,” he writes, “has led some observers to question whether a rise in additive manufacturing could lead to: the demise of global supply chains that have formed such a large part of world trade.” If that question was not enough to ponder, he wonders how “the development of drones and driverless cars; and the possible deployment of high-speed magnetic levitation (maglev) trains” could also affect supply chains. [“Maglev trains, driverless trucks, delivery drones – the stuff of supply chain dreams,” The Loadstar, 25 November 2014] Let’s briefly look at how developments in each of the major transportation arenas (i.e., rail, sea, land, and air) could change transportation as we now know it.

Railroads

Van Marle reports that Cor de Man, Uti Worldwide’s vice-president of area sales for Europe, Middle East, and North Africa, told delegates at the eft 3PL summit in Amsterdam, “The creation of maglev trains running in evacuated air tunnels — known as vactrains — where there is almost no air resistance, represented a serious threat to the air freight industry if the train technology gained widespread adoption.” De Man isn’t predicting that maglev trains will make a big splash next year, but they are something to watch in the future. Brian Palmer would probably like to see a system of vactrains at the heart of logistics. “Let’s make an effort to move more freight by rail and less by road,” he writes. “Trains are far more energy-efficient than trucks — and they always will be.” [“Let’s make an effort to move more freight by rail and less by road. Trains are more efficient.The Washington Post, 3 March 2014] I’m sure he would be willing to throw in air freight as an even less efficient method of moving goods. The question, of course, is who is going to build the infrastructure for maglev trains? De Man believes the environmental benefits of maglev technology could be what pushes the concept forward. “For me, this is the future,” he said. “If we run a train in a tube you can go up to 800kph, which could completely change the supply chain. The environmental impact of these technologies is almost negligible, and the effect on the 3PL industry will be high — this could replace aviation altogether in some lanes.”

Aviation

There are obviously two important sides of the air transportation business: the passenger side and air freight side. Greg Schulze (@travelergreg), senior vice president, Global Tour & Transport, Expedia, Inc., predicts, “The combination of increased demand met by with increased capacity, coupled with lower fuel prices means one thing: It’s good to be a traveler in 2015.” [“2015 Flight Predictions: Expedia and Airlines Reporting Corporation Release Global Report Detailing Air Trends and Pricing for the Year Ahead,” PRNewswire, 9 December 2014] For those of us who travel a lot, that’s good news (unfortunately, the good news about pricing is being offset by new, less comfortable seating arrangements in some aircraft). If you want the best savings possible when buying your tickets, the article states, “Fares will vary on any given route and on any given day: There are no magic algorithms for flight booking. However, a look at historical averages reveals that flight prices are traditionally driven by two distinct measures of time: day of week and number of days until the flight date. Expedia’s analysis of its own data reveals that, by the slimmest of margins, Tuesday is holding onto its perch as the day on which air shoppers find the cheapest flights at purchase time. More important is the day of travel. International travelers who are able to leave on Thursday and return on Monday will enjoy the greatest savings on average.” Things are also predicted to be pretty good in air freight sector. Cargo Airport & Airline Services predicts that next year the air freight industry will see “moderate growth of between 2% and 5%, globally.” It also predicts that 2015 will be a turning on the sector’s “road to the digitalisation.” [“Outlook 2015,” Cargo Airport & Airline Services, Autumn/Winter 2014] Two other developments in the aviation is worth mentioning. The first development is drones. Next year will probably see a strong push for more use of drones in the commercial sector. To learn more on that topic, read my post entitled “Will Drones Help Solve the Last Mile Challenge?” The second development involves airships. Airships may be making a comeback and, if they do, they could make air freight much more competitive with the trucking industry in some markets. They would be a real boon for remote locations with little to no infrastructure.

Shipping Industry

Darren Quick reports, “The world’s largest capacity container ship has set off on its maiden voyage. Measuring 400 m (1,312 ft) in length and 58.6 m (192 ft) wide – or the size of four soccer fields for those more familiar with that alternative unit of measurement – the CSCL Globe can carry 19,000 twenty-foot equivalent unit (TEU) shipping containers.” [“World’s largest capacity container ship embarks on maiden voyage,” Gizmag, 7 December 2014] More capacity, however, is not really what the shipping industry needs. “The global shipping industry is one of the biggest industries of today’s times,” states a Research and Markets press release. “During the coming years, it is expected to decline by 5-10% due to oversupply and high bunker oil prices that will eventually lead to constraining of its performance. A sustained oversupply of vessels combined with high bunker oil prices will pressure margins in most shipping segments.” [“Research and Markets: Global Shipping Industry – Forecasts till 2015 Featuring Players such as Nippon Yusen, Kawasaki Kisen and Mitsui OSK Lines,” Reuters, 14 March 2014] In the months since that report was released, the price of crude oil has declined dramatically. Although that may help keep bunker oil prices down, it won’t help with the oversupply problem. If that were not enough bad news, Ole Andersen reports, “According to Christopher Rex, Head of Research at Danish Ship Finance, the development of China’s economy toward the service sector could break through for real in 2015-2016, resulting in serious consequences for dry bulk carriers.” [“China’s new economy could hit bulk hard from 2015-2016,” Shippingwatch, 9 December 2014] The shipping industry is also looking at the use of drones (i.e., autonomous ships) that could help save money and increase safety. To learn more about that topic, read my post entitled “Sea-faring Drones: They’re not Ghost Ships.”

Land Transport

The most exciting near-term changes in transportation are probably taking place on land. These changes include, “Roads that can repair themselves. Pavements that use kinetic energy from passing pedestrians to light up the street lamps. [And] autonomous cars that talk to each other while they zoom around.” [“Talking cars and self-repairing concrete: the future of driving,” by Andy Sharman (@andyshars), Financial Times, 2 December 2014] At the eft 3PL summit, Cor de Man insisted that driverless trucks could have large impact on the freight industry, especially given that a driver shortage crisis appears to be a long-term trend. ‘I really do think we will get there, and the impact for the 3PL industry would be huge, because it would allow for improvements in time, cost, quality and, very likely, road safety,’ he said.” Expect to see advancements next year, but I predict it will be years before driverless trucks are commonplace on motorways. One thing you will see more of in 2015 is connected trucks. “The commercial truck is entering a new stage in its hundred-year evolution,” writes William B. Cassidy (@wbcassidy_joc). “What was once a motorized horse wagon is about to become a rolling WiFi hotspot. Increasingly, the truck is a node in an always expanding ‘Internet of Things,’ the network of devices of all types — from that Class 8 tractor to your home thermostat — connected wirelessly. The vehicle that used to transport freight is delivering data, and lots of it. As trucks travel interstate highways, onboard sensors are collecting, sending and receiving information, with the lion’s share going to and coming from a fleet management system. But as technology advances, the truck is being knit into a broader, more open network.” [“Trucking enters new era of supply chain connectivity,” Journal of Commerce, 18 August 2014]

Conclusion

Don’t expect to see dramatic changes in transportation and logistics next year. Progress is being made, but it is incremental. The first change that most people will recognize will be the increased appearance of driverless cars on the streets they travel. With almost every major automotive company working on driverless technologies, the future will be here quicker than most people think.