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Supply chain expert says access to capital, green technology and supply chain resiliency will determine the future of shipping
LONDON (August 24, 2023) — Following the news that the Pyxis Ocean cargo ship has set sail with two high-tech sails, Oliver Chapman, CEO of supply chain specialist OCI, comments on whether hybrid sailing ships, hydrogen power, or simply eliminating long-distance trade will be the future of international commerce.
"There is more than one factor to take into account when considering the future of long-distance trade,” asserts Chapman.
"There is a clear, environmental effect associated with long-distance transport. It is equally clear a technical solution is not yet possible. Electric cars might be viable, but battery technology might never be sufficient for long-distance travel — whether by air or sea.
"Events over the last year have also highlighted how rising energy costs can have a massive impact on the economic viability of the supply chain.
"But there are two less understood factors to consider with long-distance international transport and trade.
"Firstly, there is the impact on cash flow. When goods—including components and raw materials—are transported over long distances, capital is tied up in transit. This restriction on cash flow can massively impede an organisation's ability to scale; it can make the difference between a booming, high-growth organisation and one stuck in the growth slow lane.
"And secondly, there is agility. A supply chain needs to rapidly respond and adjust to changing circumstances, whether they be in supply conditions such as component shortages; the introduction of new, emerging and disruptive technology; or shifts in customer behaviours. When the supply chain stretches over thousands of miles with raw materials, components and finished goods spending considerable time at sea, the supply chain becomes less nimble.
"The technology behind the Pyxis Ocean could potentially help alleviate the problem of CO2 emissions and could, in time, even reduce transport costs. An alternative solution to sailing cargo ships may eventually be in the form of green hydrogen, although, at the moment, the technology is not ready for mass market applications.
"OCI does not expect to see the end of long-distance transport and trade. For all the reasons explained above, however, we do expect to see an increased emphasis on shortening supply chain distances with raw material sourcing and manufacturing much closer to end customers.
"Cashflow can be a massive impediment to the expansion of an organisation reliant on long-distance trade. Working capital can help make that difference.
"In concert with intelligent supply chain practices, including looking at optimal distancing for the transport of goods, that change can be transformative."
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