This article originally appeared in the March 20 edition of Shipping Network, the official publication of the Institute of Chartered Shipbrokers.
Attention is increasingly focusing on the potential impact that 3D printing will have on supply chains, in parallel with the rapid pace of the technology development. The applications are still small and few but growing at a fast pace. However, as with the adoption of other technologies in the recent past, it is likely that adoption will take place even faster than people are expecting.
Although container shipping will notice changing production patterns and supply chains through lower expected growth, we believe that the impact will be small enough and spread over enough time that the industry will be well able to deal with this.
This article looks at what the volumes of goods are that can actually be printed in the future, what role transportation costs play in the supply chain and how future production and shipping will look like as a consequence of the new technology.
3D printers have opened up the possibility of making products in small volumes, at a relatively affordable rate. Prototypes, personalised products, or with those with very specific requirements, can all be produced relatively cheaply. In some cases, easy production of these products was not even possible at all without 3D printers. Customers can even design their own products rather than relying on brands with mass production runs.
Since the automated production process of 3D printing limits the amount of necessary labour, the advantages offered by countries with low labour cost will disappear. Additionally, the geographical split between production and customer will disappear when printers are located closer to the customers and more dispersed across the world. Shipping goods over long distances will not be needed anymore, saving costs and time. Some suggest that container shipping, which has facilitated these global supply chains by offering cheap and efficient transport of goods, could be decimated. But how seriously should we take these worries?
Printable Goods Volumes
Containers are used to transport a wide range of goods, from food products, base materials, and components to simple final products and complex assembled ones. The applicability of 3D printing varies greatly across each category and hence the level of impact on shipping.
The transport of food products and base materials in containers is not expected to change. When considering the current custom records for trade between China and the EU-28, for example, we estimate that 38% of container trade (in volume) with China will not be affected as a consequence. Another roughly 5% of the container trade are products which are part of the production process. These goods are also unlikely to be heavily impacted. 3D printing would therefore (potentially) only be applicable on 57% of the goods shipped between China and the EU.
The attractiveness of 3D printing to produce products partly depends on the product’s complexity. Those with complex assembly lines will still require labour input or automated assembly lines.
Looking at the trades with China some 10% of the containerised trade is considered to be products with complex assembly, such as high-tech or machinery. These products benefit and often depend on low cost assembly lines and will therefore be less affected by the future production process of their components. The importance of the assembly lines themselves, also suggest that components will be produced in the same location even if a 3D printer could make them in a location nearer to the end customer. For example, if the body of a mobile phone benefits from production in Asia, some of its parts, accessories and components will also be printed in that same location. In summary, 3D printing could be an alternative production method for just under half of the currently shipped containerised goods between China and the EU.
THE 3D PRINTING PROCESS REQUIRES HIGHER QUALITY MATERIALS WITH LOWER QUALITY TOLERANCES
The container trade with China has a large share of relatively simple products which could also be printable in coming years. When, for example, considering trade between Korea and the EU a different profile emerges, with a larger share of complex assembled products. Additionally, intra-Europe trades have a lower share of simple products. This means that the volume of containers potentially being at risk is less than 50% on these trades. In contrast, trades with less developed regions may contain more products which are well-suited to being printed locally. Whether these trades will indeed be replaced by local production will depend on the availability of 3D printers in these developing markets.