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Disclaimer
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Agenda
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Summary
Scenarios:Why, what and how?
Three scenarios• Rough Seas• Yellow River• Open Oceans
Introduction
To support our strategy work and provide a foundation for finding ways of being prepared for the future, together with the industry.
Three challenging and different, yet plausible, scenarios about what shipping could look like in the year 2030.
By combining expert input, quality research, hard work, dedication and a bit of imagination.
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Scenarios
Scenarios are• Stories describing alternative, plausible futures and how they might
come about• A method of making sense of a complex and changing environment• A valuable tool for enhancing strategic decision-making by challenging
conventional modes of thinking
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The framework
• Time horizon• What could shape the
future: uncertainties and certainties
• Two certainties:
– Shipping will continue to be partof the transportation matrix
– Fresh that water will become more valuable
• And a large number of uncertainties Shipping industry
player
Geopolitics
Macroeconomics
International finance Globalisation
ClimateEnergy
EnvironmentLegislation
Social values Demographics
Technology TradeSuppliers NGOs
Investors Customers
EmployeesCompetitors Regulators
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Key uncertainties lay the groundwork for scenarios
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The key uncertainties refined into five dimensions:
Trade and economic growthResponse to climate change and sustainability issuesGeopolitical issues and global leadershipSolutions to deal with scarcity issuesControl of power
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Scrambledgeopolitics
Global leadershipby China
Local means to dealwith sustainability
issues
Technologicalor market-driven
solutions
Neo-colonialisticapproach creates
friction
Global actionagainst climate
change
Protectionistic,bilateral, uneven
growth
Nationalgovernmentscontrol power
Megacities andmega corporations
form the powerbase
Free trade andflow of capital,strong growth
Three scenarios
• Scarcity of resources is predominant• Climate change adds further stress• Cartels and bilateral agreements have overtaken free markets• Wealth is divided unequally among nations, resulting in tension
• Global mega-corporations and megacities have gainedpower over the nation states
• Governments cooperate on the governance of climateissues and free trade protocols
• Climate change is perceived as an opportunity andinnovating green solutions is a lifestyle
• China dominates the global arena • Resource-intensive manufacturing has moved to Africa
and other Asian countries• Economic growth is significantly slower in the West • Climate change is tackled only on a regional level – no global
agreements exist
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The first convoy of ships carrying water sails from Russia to India, protected by Navy escorts.
Rough Seas
Rough Seas
In the world of Rough Seas, scarcity of energy, water and food is predominant. Climate change adds further stress.
• Logistics chain optimised regionally• Fleets partly nationalised • Changed goods flow, reduced container traffic• New trade routes • Increased need for armed escorts
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Causes and effects
Energyscarcity
Bilateralagreements and
protectionism
Friction GDP growth
Relocationof industrial
activities andnew tradepatterns
Self-sustainedcommunities
Water andfood scarcity
positive impact
negative impact
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Timeline
2010 2015 2020 2025 2030
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EU declares ownershipof local fresh water resources.
Gulf States announce massive investments in water production
China and India name food scarcity the most important issue on their political agendas.
Water scarcity threatens economic growth in China.
WHO publishes a report stressing severe water shortages.
Economists: the EU and the USA have not yet reached sustainable economic recovery.
The increase in bilateral trade leads to the dismantling of the WTO.
Russia takes control of the North-East Arctic passage.
Chinese troops are deployed in Africa to protect China’s commercial interests.
USA intensifies attempts to re-establish influence over Latin America.
Repeated clashes over gas resources in the Caspian Basin.
Intense bilateral agreements between China and resource-rich countries.
USA starts buying energy resources bilaterally from key supplier countries.
The EU Committee for Protection of Resources publishes a directive setting quotas for resource use in various industries.
Megacities are being dismantled in India and China.
Brazil overtakes China in steel production.
Algae fuel production starts in the Baltic Sea.
Yellow River
A Chinese containership – one of many – is crossing the Indian Ocean on its way from Dar es Salaam to Shanghai, loaded with manufactured goods.
Yellow River
In Yellow River, China dominates the global arena, economically, geopolitically and in shipping.
• Most big shipping companies Chinese-owned• New ports in Africa, Eastern Russia and India• Chinese ports sophisticated logistics centres• Manufacturing to Africa and other Asian countries• Chinese energy demand counterbalanced with efficiency and cleantech• Western societies adapt sustainable living
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Causes and effects
Stronginternal
consumptionand intra-Asian
trade
Alliancescreate Chinese“satellite states”
especially inAfrica
Shift inbalance of
power
Measures tocounterbalance
Chinesegrowth
Relativeslowdown in
Westerneconomies
positive impact
negative impact
Challenges ingovernance within
the Chinese sphereof influence
Growth inChineseeconomy
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Timeline
2010 2015 2020 2025 2030
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National People’s Congress increases Chinese investments in the Middle East and Africa in order to secure resources and production capacity.
The price for oil and gas in the trade between China and Middle East is set in renminbi.
The U.S. presidential campaign focuses on internal issues.
China and India remove all obstacles to free trade and commercial operations between their countries.
China becomes the biggest importer of Middle-Eastern oil and gas.
The EU introduces protectionist taxes for Chinese goods and services.
Social tensions lead to widespread unrest in China.
Illegal immigration reaches a new record in China.
Emerging new balance of economic power forces countries to design a new FX currency based on a basket of currencies.
Tensions in relations between China and African allies.
A significant number of Fortune 100 companies are owned by Chinese capital.
Statistics show significantly increased consumer spending in China.
China increases investments in foreign agricultural production in order to secure food supplies.
Intra-Asian trade volumes are the highest in the world.
The Economist reports on a wave of EU manufacturers pulling back from China and establishing themselves in Eastern Europe. Income gap reaches a
record high in China and its African allies.
Open OceansThe world’s first floating desalination unit, powered entirely with renewable energy, is launched to serve the city of Mumbai.
Open Oceans
The world of Open Oceans is a strongly globalized one.Global mega-corporations boost GDP growth and megacities have gained power over the nation state.
• Shipping a component within optimised and integrated logistic systems• Ships simply tools in the process• Goods transported between megacities and areas rich in resources• New types of vessels developed based on environmental challenges • Climate change an opportunity, lifestyle green• Governments cooperate on climate issues and free trade protocols• Sustainable cruise vacations a growing trend
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Causes and effects
Agreementson climate and
trade
Growthof global
corporations
Technology forefficiency andsustainability
GDP growth
positive impact
negative impact
Governmentsfocus oncorporate
governance
Protection ofcommercial
interests
Growth ofmegacities
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Timeline
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2010 2015 2020 2025 2030
Post-Mexico climate talks, led by the USA and China, result in a commitment to weak, non-binding climate targets.
A global environmental footprint product labelling system is introduced.
Investments into waste management and recycling grow rapidly.
Roughly 60% of the world’s population lives in cities.
The long-term trend of mergers and acquisitions reaches an all-time high.
E.ON brings Saharan solar power to Europe.
Lagos plugs in to the Saharan solar power network.
Influence of corporations increases while that of national governments shifts to megacities after the economic crisis.
CorpWatch is created under WTO to monitor the 100 biggest corporations in the world.
A floating desaliniser storage offload unit, based on new technology, is launched.
80% of the world’s population lives in cities.
A Doha round meetsin Dubai; agrees onremoving key tariffs.
50% of world’s 200 largestcities have ratified urbansustainability standards.
Summary
Share your views, challenge us and give us feedback about the Shipping Scenarios here and now or at www.wartsila.com/shippingscenariosFollow our Twitter feed at www.twitter.com/shipping2030!
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