Robots to jeopardise 75 million jobs – affects shipping

Robots to jeopardise 75 million jobs – affects shipping 

As marvellous as innovation may seem, they can also be destructive, rendering entire professions obsolete even as they boost productivity and convenience and if widespread predictions are correct, automation in the workplace is set to increase at an unprecedented rate. There’s going to be a huge change, comparable to the Industrial Revolution, says Jerry Kaplan, a Silicon Valley entrepreneur who teaches a class in artificial intelligence at Stanford. 

Robots and intelligent computer systems are going to have a far more dramatic impact on the workplace than the internet has. Kaplan isn’t alone in this belief. A 2013 study by the Oxford Martin School estimated that 47% of jobs in the US could be susceptible to computerisation over the next two decades. A study by the McKinsey Global Institute said that, by 2025 robots could jeopardise between 40 million and 75 million jobs worldwide. There have been two major developments over the past 10 years says Kaplan. 

The first relates to advances in machine learning, the ability to organise large volumes of data so you can get actionable intelligence. The second is the availability of data of all kinds, coming from smartphones and other low cost sensors out there in the environment. When you add those two things up, the availability of the data along with the ability to interpret it, it enables a whole lot of things that you couldn’t do before. Many areas of manual work are being affected. Robots in factories and warehouses are becoming more mobile, versatile and affordable. 

A US designed robot called Baxter, which can handle a wide variety of tasks from loading to packaging, currently costs GBP 19,000. If you’re digging a ditch or painting a house, laying pipes or setting bricks, anything that involves basic hand eye co-ordination, there will be low cost, efficient mechanical devices that can do that work, says Kaplan. It’s not just manual labour that is ripe for automation, white-collar jobs are also at risk as software becomes more sophisticated. One example is Quill, a program developed by US company Narrative Science that crunches data and generates reports in a journalistic style. 

Data analysis work in areas such as advertising and finance is being outsourced to computers and even the authority of medical experts is being challenged. IBM’s Watson computer, which won the American TV quiz, Jeopardy in 2011, is being used to diagnose cancer patients in the US. Not all jobs are at risk. A lot of work involving personal interaction won’t be affected says Kaplan. Nobody wants to go to a robotic undertaker who says, I’m sorry for your loss, it’s just not meaningful. 

But it depends on the activity the more transactional it is, the more likely it is to be automated. If you go to a fancy restaurant, you don’t want a robot waiter. On the other hand if you go to McDonald’s you won’t have a problem with punching buttons and having a burger come out of chute somewhere, as referred in “Portfolio”. Shipping and ports in Asia thrived on the business model of outsourcing manufacturing to Asia. This business model is now under threat due to automation.

Container repositioning – headache for carriers

The analyst said in 2015, carriers operating between Asia and North America had to reposition 1.2 million TEU more than they did in 2014 due to the growing imbalances. Between Asia and Europe (including the Mediterranean), the amount of repositioning decreased by about 600,000 TEU, but the total remained very high at around 7.8 million TEU. In an analysis of the full year statistics in its Container Insight Weekly, Drewry found that the overall growth rate of container volumes masked some of the larger ups and downs on the trades. 

The main East-West trades could between them manage head-haul growth of just 1.7%, or 625,000 TEU, with Asia-East Coast North America growing at 16.4% and Asia-Mediterranean trade declining 4% compared to 2014. Asia-North Europe head-haul volume was down 3.5% year-over-year. But Drewry said the biggest drag on volumes has been the backhaul on the East-West routes. Return traffic in 2015 was lower than it was in 2012 by 200,000 TEU. Over the same period, East-West fronthaul volumes added 4.5 million TEU, while the aggregate North-South volumes have added 2.2 million TEU and 1 million TEU for the headhaul and backhaul respectively. 

This has two important implications, firstly it suggests that Asian importers are looking to broaden their sourcing origins to regions such as the Middle East and South Asia away from North America and to a lesser extent Europe, reducing the long-term outlook for those export markets and secondly that East-West carriers will have to endure higher equipment repositioning costs as the trade imbalance widens, the analyst said. 

In 2015, there were 2.2 TEU moved for every one backhaul container in the Asia-Europe, Trans-Pacific and Trans-Atlantic lanes. The aggregate ratio was below times-2 until 2014. For individual trades, the widest gap exists on the Asia-West Coast North America route at times-2.7, up from times-2.1 in 2012, as referred to by JOC.

Mega-ships blamed for increased supply chain costs

Container lines have been accused of raising costs across the global supply chain from cargo terminals to hinterland transport as they pursue economies of scale through the deployment of increasing number of mega-ships. The maximum size of container vessels has doubled in the past decade, considerably reducing carriers own costs but imposing additional costs on shippers and other players in the transport chain, according to Chris Welsh, Secretary General of the Global Shippers Forum, an industry lobby. 

While most industries evolve, container shipping innovates in ‘big chunks’ and rest of the supply chain can’t keep up, Welsh told the International Cargo Handling and Co-ordination Association conference. Ships can be built in two years, but ports need 10 years to expand, said Olaf Merk of the International Transport Forum at the Organization for Economic Co-operation and Development, an intergovernmental organisation. Container terminals also are racing to keep up with the arrival of mega-ships, said Federation of European Private Port Operators President Gunther Bonz. 

If you order a new crane today, it will take two years to arrive. The investment in bigger cranes to handle bigger ships – EUR 100 million ($ 110 million) for two berths isn’t only an issue for big terminals, but also for smaller ports that are now handling larger vessels that are being replaced by mega-ships of up to 19,000 twenty-foot equivalent units on major East-West routes. Vessels of 14,000 TEUs will soon go to Africa and South America, noted the OECD’s Merk, who said, “the worst is still to come… with most mega vessels not yet build”. 

We are also victims of mega-ships, which are pushing up costs, particularly at ports, said Ghana Ports and Harbours Authority Director General Richard Anamoo. The deployment of mega-ships has led to the bunching of vessels, peaks and troughs in cargo handling, terminal congestion and void sailings, piling up costs across the supply chain, Welsh said. The average number of container moves per vessel in Hamburg, Europe’s third largest container hub has increased over the past five years from 2,000 to 2,500 to between 6,000 and 7,000 at present, resulting in a significant impact on landside and hinterland operations, said Feport’s Bunz. 

As trucks are banned form the roads on Sunday, the arrival of three mega-ships, each with 6,000 moves, over the weekend will result in 25,000 trucks coming to and from the port on Monday morning, up from 10,000 three to four years ago, as highlighted by JOC.

India relax cabotage restrictions – concern of transhipment ports

Indian Ministry of Shipping order dated 7 March, on Relaxation of Cabotage restriction for container transhipment ports, state that in exercise of the authority vested in the Central Government vide section 407(3) of the Merchant Shipping Act, 1958 as amended, it has been decided with the approval of the competent authority, that the provisions of section 407(1) ibid shall not apply to a container handling port which tranships at least 50% of the container traffic handled by the port. The cabotage relaxation shall be subject to the following conditions, namely:

That it shall be for ex-im laden and empty containers only.

That for the purpose of determining the cargo handled by the container port, only container ex-im cargo (i.e. overseas loaded and overseas unloaded), container transhipment of ex-im and empties handled by all the terminals of that port shall be included.

That any new or existing container port handling transhipment traffic can apply for the said relaxation to the Directorate-General of Shipping. The Directorate-General of Shipping shall grant relaxation for a period of one year for existing port and two years for a new port. Apart from other details, the port shall submit the existing container traffic being handled by the port and the projected transhipment of containers on quarter-wise basis for a period of one year (two years for new ports).

That the container handling port is able to tranship 50% or more of the cargo handled during the first year, the said relaxation shall continue else it shall be revoked.

That the new port will have a gestation period of one year and shall have to achieve the stipulated transhipment traffic of at least 50% of the traffic handled in the second year.

That the container handling port will have to provide monthly container traffic data for monitoring to the Directorate-General of Shipping and the Ministry of Shipping by 5th of the following month in the prescribed format.

That the container handling port whose relaxation is revoked shall not be considered for cabotage relaxation for the next three years.

(The writer a Maritime Economist is a Chartered Fellow (Logistics Transport), Chartered Shipbroker (UK), Chartered Marketer (UK) and a University of Oxford Business Alumni. He is also a Fellow of NORAD/JICA and Harvard Business School (EEP).)