Container shipping has come a long way in the last 50 years, bringing revolution to the global supply chain and taking its part in facilitating unprecedented growth in world trade. Where next?

It is well over fifty years since the first container ship took to the seas. However, it took until the late 1960s for the concept to gain traction and even then many saw it as an investment risk too far, while the early adopters almost certainly would not have predicted that this method of carrying cargo would consume more than 50% of global seaborne trade, alongside the explosive growth in trade itself.

In 1968 fewer than one million twenty foot equivalent units (TEUs) of containerised cargo were moved, whereas over 182 million TEUs were moved in 2016. Today, about 90% of non-bulk cargo (about 60% of the value of goods carried by sea) worldwide is transported by container. Recent years have seen an inexorable increase in the size of the largest deployed tonnage, now moving in one hull in excess of 20,000 TEUs and projected to grow further.

Trade: volume - and safety?

Before the advent of containerisation, cargo was carried in break-bulk ships; loaded, lashed, unlashed and unloaded from the ship on pallets, in crates, in bags, in slings or nets. This was a time-consuming, cumbersome, insecure and dangerous business. However, by packing cargo into containers, significant volume and mass of goods may be transported and handled from 'door to door' in a single unit, with the minimum of disruption, providing greater protection to the contents and personnel involved.

Inevitably, containerisation has lowered shipping costs and facilitated a reduction in supply chain timescales. Embracing economies of scale, containership operators have sought to deploy ships of a size that push the boundaries of types and volumes of trade, navigation channels, technical design, construction and propulsion, and the port facilities required to load and unload the cargo.

There is little argument that the unit load has underpinned the rapid growth of the Chinese and other Asian economies over the last five decades. However, the container's chief asset remains adaptability throughout all global supply chains; the frontiers yet to be unitised include parts of the world where infrastructure is less developed and the economics for cargo volumes currently continue to be weighted against the use of this standard containment system.

The role of TT Club

Since its foundation in 1968, TT Club has single-mindedly sought to serve the insurance and broader risk management needs of the international supply chain community. While birthed in the paradigms introduced with containerisation, including the need for insurance for the physical unit wherever it is and the plethora of contractual responsibilities arising from the seamless movement of goods from warehouse to warehouse, the Club rapidly became a unique niche specialist, not only focused on the international unit load concept but also responding to the diverse stakeholders coalescing around the interfaces of broader international trade.

Customers range from some of the world's largest shipping lines, busiest ports, biggest freight forwarders and cargo handling terminals, to companies acting on a smaller scale but whose operations face similar risks. It is this reality that continues to fuel the Club's passion to understand the complexities of international trade and logistics, seeking to support trade initiatives, while ensuring that safe practices are enhanced and not compromised.

The Club rapidly formed its key network, so that it is now able to respond in local language and time-zone, with awareness of relevant laws and practices, in well over 20 nations for insured entities trading in about 150 countries. Furthermore, utilising its hugely diverse customer-base, collaborative approach with industry associations and non-governmental organisations, the Club has developed a privileged trusted position with governments and inter-governmental agencies, delivering broader value to the entire industry.

'Brave New World? Container Transport in 2043'

In this context, TT Club and McKinsey & Company have carried out qualitative research to consider possible futures over a 25 year horizon for the containerised industry. Being involved with the entire freight supply chain on land, at sea and in the air, the research project sought to identify the opinions of a broad spectrum of senior leaders across the entire industry, interviewing the Club's Board of Directors, as well as a number of 'disruptors' and other stakeholders.

In formulating the four 'bookend' possible futures, the research revealed an almost-religious debate among the participants about the real fulcrum on which the industry's long term future rests. On one hand, many focused on trade growth and whether it is possible that the industry will enjoy another boom similar to the two decades leading to 2008, or, at the other end of the spectrum, whether robotics, 3D printing, near-shoring and geopolitical pressures could cause a structural slowdown in trade growth. On the other hand, with equal passion, were those who argued that digital, data and analytics are the key game-changers, from which new ways to satisfy customer needs will deliver value.

It is impossible to know how different trends, uncertainties and discontinuities will combine together over the next 25 years. This new publication is gifted to the industry to engage all stakeholders in a debate that may shape the next generation. Please join the conversation!