As February 2021 comes to a close it end a year of COVID-19 for us in LEO Lane. The first lock down on businesses here was in March 2020 and we are just starting to exit from a prolonged (7-8 week) third lockdown. We thought it was a good point to take a look at different additive manufacturing (AM) application industries and see what the impact has been on the industries and the AM applications in them. Today we start with the various transportation industries: air, land, and sea. COVID-19 is certainly having traumatic and negative effects worldwide, however the business side effects of it are not uniformly negative. While some businesses have suffered badly from the lock downs, those businesses that have embraced a more digital and cloud/SaaS based strategy have seen new opportunities open up and be seized. This is because digital-SaaS-cloud is best suited for a situation in which remote work and occasional supply chain failures are the norm rather than the exception.
Takeoff or Landing?
The aviation industry is arguably the most hard hit by the pandemic of all transportation sectors. Borders have been closed for long periods and air travel has been strongly curtailed. This is a necessity as travel enables mutations (variants) of the virus to spread rapidly around the world. However, even in this industry there are pockets that are doing better than others. Retrofitting of passenger planes to cargo planes is thriving as ecommerce activities have soared 44% year over year in 2020 in the US. This surge in ecommerce affects demand for parcel air shipments and is fueling a bounce back and growth in air freight traffic (which was significantly down year over year in April 2020 and even in August 2020). Because of AM’s applicability to tooling there is an (as of yet largely untapped) opportunity in the retrofitting business – tools can aid in a more efficient and rapid retrofit.
Aerospace companies in general have witnessed the show of robustness that AM has exhibited in the last year and, in spite of lower revenues and many challenges, some are wisely continuing to invest in AM. Similarly, the military push of suppliers, including aerospace, to provide (secured!) digital inventories continues. Still, some projects have extended their timeline or been put on hold as the industry goes through a transition into an unclear new normal.
Accelerate or Brake?
According to the European Automobile Manufacturers’ Association (ACEA), in the first 9 months of 2020 the lost production due to COVID-19 was equivalent to over 22% of 2019’s annual production – one quarter of this loss is in Germany. This is not just because of shut downs but also because of lower demand for new cars following extensive remote work. Still, the ACEA expects that, after the weakness continues in 1Q21, production volume will rebound in the 2nd half of 2021 for an annual year over year increase of 10% over 2020. The automotive industry entered the pandemic already in transition as the mobility industry is becoming more digital and more aaS (as a service) than ever. Analysts are urging companies to use the pandemic driven crisis to position themselves for the future of automotive with a more flexible and more digital workforce, supply chain, and manufacturing. AM and digital supply chains fit well in this narrative and anecdotal evidence suggests that there is a pick up of consideration and adoption of AM parts by some part vendors. This industry was not as hard hit as aviation but it might be the one with the most to gain from a thought-out, timely, and more forceful (than before) strategic shift to AM and digital supply chains. Because certification (internal to brands or external) is common, it is even more important than usual to enable tracking and certification enforcement and take that into account in the strategic plan.
Swim or Sink?
When COVID-19 struck in 1Q20, many container shipping lines canceled planned departures or opted for blank sailing (sailing empty to destination with the hopes of continuing on schedule from there). In May 2020 unused capacity worldwide was above 11%. However, as both supply and demand adjusted to the pandemic situation, unused capacity has sharply declined and 5 months later, in October 2020, reached 1.8%. These strange dynamics, coupled with COVID-19 related closures, have created a shortage of empty containers in China – container prices have tripled and more. In addition, there are shortages in some goods such as white appliances in the US and Europe. Overall, UNCTAD (the United Nations Conference on Trade and Development) estimates global maritime trade will be down 4.1% in 2020 and will bounce back 4.8% in 2021 helped by soaring consumer demand that is currently creating backlogs for container shipping companies. Other parts of the maritime industry were more uniformly hit, especially the cruise ship operators who have suffered from a literal halt in tourism – hopefully to improve with widespread vaccination in 2021.
All these hard to predict fluctuations and failures serve to further highlight the advantages of moving to a more digital and secured supply chain with additive manufacturing – a push to logistics related and turnkey AM applications. Even in the maritime industry itself we saw several new announcements of AM turnkey solutions dedicated to spare parts for this industry in 2020. As in the industries above, analysts urge the maritime industry to use this uncommon period to innovate, adopt new technologies and, predictably, digitize.
The COVID-19 pandemic is highly complicated not only in its health effects but also in its business and economic effects, side effects, and tertiary effects – perhaps especially in the transportation sector. Overall, luckily for our AM ecosystem, the pandemic has had a silver lining in terms of moving everything digital forward in turbo speed. It is now up to transportation companies collaborating with AM ecosystem players to make the most of what digital supply chains and additive manufacturing offer for a more robust, and more efficient future.
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