Experts are divided on the extent to which disruptive manufacturing technologies and processes will impact logistics and freight transport flows, despite recent indications that it will drive some nearshoring and reshoring in Europe and other key consumer regions.
Adidas’ announcement several months ago that it was setting up a Speedfactory for the mass production of running shoes in Germany − where it ceased manufacturing activities more than 20 years ago, transferring them to Asia − on the surface suggested that production innovationsmay transform supply chains. But supply chain innovation specialists have told Lloyd’s Loading List that the picture is a complex one, although they agree that the ways some supply chains are strategically planned and operated will change.
Advances in 3-D printing (or additive manufacturing), robotics, and automation mean that Adidas can now afford to bring production ‘back home’ and in proximity to customers in major markets in Europe while meeting demands for faster deliveries and offsetting wage inflation in Asia and protracted shipping times. The plant in Ansbach, southern Germany, will enter service next year and Adidas is planning to open a second Speedfactory in the US in 2017.
While Adidas’ CEO Herbert Hainer enthused that the Speedfactory was “revolutionizing the industry”, in the logistics sector, expert opinion differs on the impact of disruptive technologies in driving change in supply chains − and in particular, the consequences for intercontinental trade flows by air and ocean.
A research paper published by PricewaterhouseCoopers (PwC) entitled ‘2015 Commercial Transportation Trends’, which drew on data from nearly two dozen industry sectors, concluded that as much as 41% of the air cargo business and 37% of the ocean container business was at risk because of 3-D printing. Growth in additive manufacturing would lead to many products and parts, and the raw materials needed to make them, being produced locally, reducing or eliminating the need to ship them great distances to market, the theory goes.
PwC’s research identified footwear, toys, ceramic products, electronics, and plastics as the industries with the highest potential for ‘disruption’ from 3-D manufacturing and hence most likely to reduce their reliance on commercial shipping. But 3-D printing is a less viable alternative for sectors such as perishables and pharmaceuticals, the study confirmed.
While PwC’s paper may have set the alarm bells ringing for some freight forwarders, Professor Alan Waller, vice president for supply chain innovation at EFESO Consulting, urged caution on the impact of robotics and 3-D printing and of viewing disruptive technologies in isolation, arguing that supply chains are complex, multi-phase processes and not limited to manufacturing and getting the product to market. “There’s a lot of hype about what happens in individual elements of the supply chain − for example, 3-D printing, robotics or autonomous vehicles,” he said.
“These disruptive technologies will certainly dramatically change the way in which the supply chain is strategically planned and operates in many sectors, and for many products. But it’s not a question of waving a magic wand. There’s a lot of strategic analysis involved and also the change has to be implemented.”
Asked how he saw disruptive technologies affecting air freight specifically and where aerospace − a key vertical for air freight − has been one of the first industries to embrace 3-D printing, Waller said that at this stage it was difficult to predict. Some have suggested that raw materials required in the making of goods by 3-D printers would also still need to be shipped to supply more localised production sites and the 3-D printing hardware itself too, although he doubted whether this would compensate for the loss of volume in finished goods for such a high-cost transport mode as air freight.
“However, my gut feeling is that air freight will continue to grow,” he added. “Globalisation won’t be reversed, even globalisation in Europe. Disruptive technologies may slow it down a little bit in some areas, but I think we are in a world where globalisation is still increasing.
“And if you add to that positive world GDP and growth in international trade, the outlook for air freight appears to be fairly good.”
Markus Kückelhaus, vice president of Innovation and Trend Research at Deutsche Post DHL, also guards against hype surrounding disruptive technologies and dismisses the claims that it is going to revolutionise mass production. “This is as naive as saying that everyone is going to have a 3D printer in their garage,” he quipped.
Kückelhaus and his team have studied how 3-D printing will impact trade volumes in the automotive and life sciences industries by 2020. Their findings reveal that only 2-4% of DHL’s ocean freight forwarding traffic on the key Asia-Europe trade lane is at risk within that period as a result of manufacturing in these verticals being moved closer to consumer markets. No specific data has been released for air freight, but Kückelhaus believes that the impact will be no more significant than that on ocean freight.
However, Kückelhaus underlines that regional logistics networks are likely to become more complex due to a growing number of manufacturing strategies focusing on a shift from global or intercontinental to more regional or local supply chains and distribution.
“On top of that, I think the 3-D printing industry will in time be organised into clusters, with spare parts printed on an on-demand basis only from dedicated facilities serving regional markets, some which could be located at airports.”
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