A supply chain revolution

A supply chain revolution

The Freight Hyperloop concept, which could initiate a supply chain revolution, uses a sealed capsule inside a vacuum tube to transport freight at the speed of flight, at a fraction of the cost. Robert Platt and Yvonne Mulder report.

Time and time again airfreight stakeholders have been warned to embrace digitization or risk getting left behind.

This has never been truer than it is today, with a growing threat to traditional air cargo supply chain businesses coming from new disruptive technologies that often appear better equipped (and available at lower cost) to embrace the industry’s march into the future.

This is particularly true in the case of e-commerce, whose explosive growth, according to some, is resulting in an uphill battle for the current air cargo infrastructure.

One company believes it will one day very soon have the ability to fill in for, or even replace airfreight entirely, if it ever gets off the ground, as it were.

Marcia Christoff, public relations Manager for Virgin Hyperloop One, said the new freight hyperloop concept could initiate a supply chain revolution thanks to its ability to transport freight at the speed of flight, and at a fraction of the cost.

The venture is being run jointly by Virgin Hyperloop One and a new cargo brand called DP World Cargospeed. It is still under development, but when realized it aims to carry palletized cargo in elevated pods at 620 miles per hour by 2021.

Christoff said: “Our market assessments show that there is going to be a dramatic shift in consumer and business behavior, with growing demand for higher speed shipments.

“Air cargo currently accounts for less than 1% of world freight tonnage, and what you have is these rapidly growing sectors that airfreight does not currently have the capacity to keep up with.

“What we are creating is far more convenient and more cost efficient; we expect to reduce warehouse inventory by as much as 25%.

“This is an opportunity for us, we are combining the speed of aircraft with the capacity of rail, with the convenience of metro, all rolled into one.”

In particular, hyperloop will challenge the air freight industry in that it will target high priority on-demand shipments that have been traditionally served by air.

Rapid growth in e-commerce, which will be worth around USD4 trillion by the end of the decade, and the express and parcel industry, expected to grow to USD500 billion by 2025 – according to Virgin Hyperloop One – were both strong drivers for hyperloop.

Some commentators have questioned the viability of the hyperloop concept in terms of the technology (it uses a sealed capsule inside a vacuum tube, propelled by magnetic levitation) and the expense and planning issues associated with building the infrastructure, but many believe there is a demand to be met.

Andy Rail from Transport Intelligence said: “Ultra-high-speed freight transport is a highly desirable prospect.

“Time-sensitive freight accounts for one third of global cargo by some estimates, and the rapidly expanding e-commerce market and growing ‘on-demand’ consumer culture means this desire is only likely to heighten.”

However, he cautioned, the age-old problem facing air freight – too much time spent on the ground – is likely to be a challenge for hyperloop systems as well. “For this to work, handling and transportation issues at the first and last mile stages still need to be addressed.”

Brandon Fried, Executive Director, Airforwarders Association, said the hyperloop concept faces a number of challenges “but what successful entrepreneurial project does not?”

He believes it will generate its own market demand in the way Fred Smith of FedEx did for overnight deliveries “by selling people something they did not know they needed”. So maybe hyperloop will not threaten the traditional airfreight industry, but find its own new customers?

Freight forwarders are mode agnostic. We just have to solve challenges and find solutions. This is one more tool for us to use. There will always be a customer who wants to buy time and we sell time for a living.

– Brandon Fried, Airforwarders Association

Fried is inclined to agree: “Freight forwarders are mode agnostic. We just have to solve challenges and find solutions. This is one more tool for us to use. There will always be a customer who wants to buy time and we sell time for a living.”

He does emphasize, though, that the last mile has to be part of the equation for hyperloop freight shipments. “A lot of the airfreight process is on the ground. Hyperloop will face the same challenges. It is not the flight that is the issue. There is no point getting the package from New York to Washington DC in 30 minutes and then taking another three hours to get to my desk or house.”

Rail suggested that hyperloop will face two other challenges encountered by the air freight market – price and passenger priority. “We have to ask how much more shippers would be willing to pay for the time saving. Additionally, with passenger transport being the most obvious application of the technology, there is no guarantee that freight movement would gain precedence.”

It seems that there is still some way to go before the hyperloop system will be carrying any significant amounts of cargo that would otherwise have been shipped by air. And, in the meantime, there are many other aspects, such as the so-called Fourth Industrial Revolution, autonomous vehicles, 3D printing, and drones, all of which could be used to make the air cargo industry more efficient.

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