Supply chain expert and author Mark Millar believes 3D printing is destined for a niche role in logistics rather than a huge disruptive effect, with other factors likely to have more of an influence over intercontinental freight flows during the coming decade.

In the first of a two-part interview with Lloyd’s Loading List, the former senior executive with UPS and DHL – now a Hong Kong-based keynote speaker and visiting lecturer specialising in supply chain and logistics – and the author of the book ‘Global Supply Chain Ecosystems’ highlights some of the current major developments in global supply chains and their likely impact on freight flows. His starting point is the topical issue of disruptive technologies and in particular 3D printing, also known as ‘additive manufacturing’ (AM).

“What tends to be forgotten is that 3D printing has been around for 30+ years but is only now starting to become mainstream, and in that sense its time has come,” Millar says. “What we are seeing so far is that it has a role to play in certain niche applications.”

He singles out three specific areas where the 3D printing technology is particularly relevant. The first is prototyping, where the specifications of a product can be rapidly transmitted digitally anywhere around the world to produce prototypes on-location.

A second area is aftermarket or service logistics, where spare parts are required to be available on a timely basis across a broad range of industries – automotive, aerospace, healthcare, computers, and telecoms. In all of these applications, a critical success factor is the engineer having the right parts or components available – and with 3D printing these can be manufactured swiftly on-site.

“Thirdly, 3D printing technology will likely find a niche in remote, inaccessible locations – for example, in developing countries, where supply chains are uncertain – or in hostile environments, particularly where there’s a real need for the on-demand and on-location production of goods such as medical equipment and prosthetics.” 

But AM is evolving rapidly, and the operating costs of 3D printers have come down dramatically in the past five years as they have become more efficient and increasingly faster in turning out goods, opening up new opportunities for the ‘disruptive’ technology, Millar underlines.

“When you consider that the Apple iPhone is less than 10 years old and how it has revolutionised daily life… Where might additive manufacturing be 10 years from now? Will it have transformed society as the smartphone has? That’s difficult to call.”

Hewlett Packard’s recent launch of a commercial 3D printing system and the availability of many home 3D printers “in the affordable sub-$500 price range” provide additional food for thought. “It seems that 3D printing also may have a future in the domestic arena – and certainly the idea that the 3D printer is a game changer not only in industrial applications, but also as a product with consumer applications, is gaining some traction,” Millar notes.

“But while I’m convinced that AM’s time has come, I don’t see it revolutionising mass production and global supply chains as some observers are predicting, at least not in the medium term.”

Nor is he expecting it to exert a significant impact on intercontinental freight flows and expressed surprise at the conclusions of a research paper published by PricewaterhouseCoopers (PwC) which estimated that as much as 41% of the air cargo business and 37% of the ocean container business was at risk because of 3D printing.

“I don't know what methodology was used to arrive at these conclusions, nor the timeframe of the study, but in any case I would argue that other factors are going to have more of an influence over intercontinental freight flows than the 3D printer.

“What is sometimes lost sight of is that air and ocean freight markets are directly linked to derived demand. If economic growth is slow, then air and ocean freight volumes are going to be slow; and when economic growth is strong, the same correlation applies – more economic growth equals more trade and therefore more freight flows. 

If we adopt derived demand as the framework of our thinking and explore where the demand patterns are changing, we come to the conclusion that there is a huge increase in demand generated by consumer markets in developing economies, which are predominantly in the East. Conversely, there is much lower growth in demand in developed markets in the West, which traditionally were the driving force of international trade.”

Millar argues that the emergence of new consumers on a very large scale and in new geographies will trigger shifts in cargo flows. “Coupled to this is a continuous pursuit, from the production perspective, of the lowest cost labour platform, and what we are now seeing is that some of the manufacturing in China – no longer as cheap as it once was – being moved elsewhere, with Vietnam, Hungary or Mexico the main destinations. 

“This is changing some of the trade flow patterns and could lead to an increase in regional trade flows at the expense of some of the global trade flows. 

He believes the regionalisation of supply chains could become an established trend, where ‘made in eastern Europe’ is for Europe, ‘made in Latin America’ for the US, and ‘made in Asia’ for Asia – but without this marking the end for Asia-US and Asia-Europe trade lanes.

“Regionalisation of supply chains contrasts sharply with the whole trend of offshoring to another continent, which had been the path taken by a number of mainstream manufacturing industries in North America and Europe in search of low-cost labour, notably in Asia.

“This has given way, to a degree, to near-shoring – which, for example, would be re-locating to Mexico to serve the US ? followed by an offshoot, on-shoring, which scores political bonus points when somebody brings manufacturing not closer to home but back home. That’s pretty big news: factories are opened, jobs created. Politicians love it.”

The most recent trend, Millar notes, is right shoring, “a combination of each of the supply chain footprints that have preceded it ? and where ‘right’ is right in the sense of the right geographical location for a particular product range to serve a particular market at a particular period of time.

“3D printing could lend itself to this, because the less you have to invest in the plant and capital equipment, then the easier it is to be more mobile when you need to move it,” he adds. “So it could play into that role. 

“Right shoring is definitely the direction supply chains are taking at present, and clearly there are implications for established global trade lanes and related transportation linkages, leaving freight carriers, airlines, ocean shipping lines, port operators and the logistics sector as a whole having to re-evaluate and re-configure their services and offerings to take the changing supply chain landscapes into account.”

Meanwhile, the election of Donald Trump introduces new elements of uncertainty into the calculations for issues such as right-sourcing, near-sourcing, globalisation, and regionalisation, for next year and beyond, with Millar predicting “rocky roads” ahead.

“Uncertainty is my main prediction for 2017 under Trump,” says Millar. “It looks like American consumers will be facing price hikes for a wide range of goods, either through punitive import tariffs or the higher costs of re-shored production.

“Trump killing off the Trans Pacific Partnership (TPP) – which now seems all but dead in the water – opens a pathway for China to lead global trade initiatives with the Regional Comprehensive Economic Partnership (RCEP), which includes almost half the world’s population and 30% of world GDP, but excludes the USA. The RCEP then becomes the pathway over the medium term to the broader Free Trade Agreement of the Asia-Pacific (FTAAP), which should include both China and the USA.”

Mark Millar is the author of ‘Global Supply Chain Ecosystems – strategies for competitive advantage in a complex, connected world’, published by Kogan Page and available from www.markmillar.com