3D printing – also known as additive manufacturing – has been held up for many years as an evolving threat to global trade. If printing of parts can be done locally, there will be no need for ships to transport those consumables from producer to end user – or so the thought process goes.

But Raoul Leering, head of international trade research at ING, has downplayed that risk. In an editorial, he noted that the impact of 3D printing on world trade will be limited over the next two decade.

ING research forecasts that the share of 3D printed goods in global manufacturing could rise to 5% over the next two decades. While that is a significant increase from the current share of 0.1%, it is much lower than in two scenarios that ING detailed in its 2017 report on additive printing. “The effect on world trade is more subdued as well, at -4.5%. This implies, on average, 0.2 percentage points less trade growth per year,” said Leering.

The threat posed by 3D printing on world trade is most prevalent in the production phase of a product. 3D printing usually means the “re-bundling of production phases”, because 3D printers can make the product as a whole. This shortens the supply chain, which means less trade in the intermediate parts of the chain. “And as far as 3D printing is part of a strategy to produce closer to the customer – given the rising popularity of local for local – it leads to less cross border trade as well,” Leering said. However, he added that this re-bundling process does not always equal proportionally less trade. Leering pointed to a World Bank study that found for hearing devices and dental crowns, 3D printing has not led to localisation as production only takes place in a few countries. So, specialisation in the manufacturing of a product is a key factor in where it takes place.

Size over weight

Leering added that a product’s size is more important than its weight when gauging the effect of 3D printed products on trade and transport. “Knowing that many 3D printed goods are customised goods and those which are usually of the size between a marble and a football, transport costs are often not decisive when choices are made regarding the location of production of 3D printed goods.” IMG therefore believes that it is plausible to assume that transport costs are less determinative for the profit margin of 3D printed products than for those produced on mass. “This means that the substitution of traditional production methods by 3D printers probably does not always translate into bringing production closer to the consumer. So, it also doesn’t translate into less trade and transport,” Leering said.

Calculating the long term impact, ING states that while forecasting the speed of the technological improvements of 3D printing is difficult, it feels “comfortable” with forecasting a rise in the market share of 3D printing, in total manufacturing, to about 5% by 2040. This equates to a permanent downward effect on the size of world trade of around 4.5 percentage points of global trade. However, the caveat to this forecast is that it is valid only if all printed goods were to be made close to the consumer. “But keeping the experiences of dental aids and hearing devices in mind, the effect of switching to 3D printing on world trade will be somewhat lower, around 3% to 4% for goods. Taking into account the part of traded services that are linked to the goods trade, the damage to trade adds up to 4.5%,” Leering said.

Forecast risks

There are downside risks to consider when forecasting the growth in 3D printing and its concomitant effect on world trade. For one, 3D printing is currently not economically competitive for producing uniform products – such as rubbish bags, bottles and plugs – in large volumes. “As long as this is the case, 3D printing will not lead to large changes in the complex cross border value chains that currently characterise the way mass products are made,” Leering said. Therefore, 3D printed goods will in the short term be mainly for customised and complex-shaped products, either as one-offs or low quantity series.

Leering acknowledged that this restriction might change if there are significant technological developments in 3D printers, however “industry experts don’t expect this to happen anytime soon”.

But there is still some room for growth in 3D printing through other factors: an increase in the number of applications as machine, material, and operational costs are driven down; an increase in the popularity of customised products; and/or an acceleration in the adoption of 3D technology as proof of concepts and its usefulness are accepted – particularly as 3D printing has proved its worth throughout the Covid-19 pandemic.

In summary, though, Leering is confident that any downward influence on the growth of cross border trade and transport as a result of 3D printing take-up will be “less than proportional because transport costs are financially less important for customised products than for standardised ones.”
Source: The Baltic Briefing