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Challenges and Prospects of the Container Transport Industry (McKinsey Study)

The container transport industry, which plays a vital role in supporting global trade, faces a number of challenges and uncertainties. In this article, we will draw on the study conducted by McKinsey & Company, titled “Four futures for the container transport industry”, to explore these challenges and discuss prospects for the future.

The Vital Role of Container Transport

Container transport is essential for the functioning of global trade. Containers, by their simple, modular, and ubiquitous nature, carry almost a quarter of all dry goods transported by sea and virtually 100% of everyday goods, such as televisions, toys, and clothes. They allow for the easy movement of goods from door to door via trucks, trains, ships, and ports, reducing the cost and complexity of transport, to the benefit of consumers.

Another McKinsey study suggests that in the future, autonomous ships with a capacity of 50,000 TEU (Twenty-foot Equivalent Unit) will sail the seas, alongside modular containers, similar to drones. It is estimated that the volume of container transport will be two to five times greater than at present. A concrete example is the use of telematics systems for real-time monitoring of vehicle location and the condition of containers during transport. These systems include sensors that transmit data about location, temperature, humidity, stock, and other important information about the content and condition of the containers.

Financial and External Challenges of the Industry

However, the industry that underpins container transport faces numerous challenges. It is currently financially precarious, with only a few players having found a recipe for creating long-term value.

In addition to inherent financial pressures, the industry also faces a number of disruptive external forces, such as automation, digitization, and a shift in the global economic and political landscape. There is great uncertainty about where value will be created in the future – will it be through scaling, flexibility, value chain integration, productivity, more predictable supply chains, environmental performance, or something else?

The McKinsey & Company study identifies four possible futures for the container transport industry, each based on different responses to these uncertainties:

  • Digital Disruption: In this scenario, new entrants – startups and e-commerce firms – use digital technology, data, and analytics to optimize the end-to-end value chain, disrupting incumbents.
  • Digital Reinvention: This future envisages the transformation of the industry through digital innovation, but aggressively led by current players. In this future, incumbents successfully transform to bring new services that add value to their customers.
  • The Third Wave of Globalization: This scenario envisages a world of rapid trade growth. It assumes that emerging economies, such as India and Africa, realize their production and export potential, with global supply chains smoothed by digital advances.
  • “Peak Container” and Consolidation: This scenario presents a darker trade story. It imagines a future of trade wars, geopolitical tensions, and “near-shoring”, where international trade is in decline. The industry is forced to consolidate.

The container transport industry faces challenges, but also significant opportunities. Understanding these challenges and the possible futures for the industry is essential to successfully navigate this period of change and uncertainty.