The pandemic has exposed the vulnerabilities of global trade, with freight rates up to tenfold, and months of waiting.
Outside the Port of Los Angeles, more than 50 container ships await.
Can a Norwegian company in Silicon Valley contribute part of the solution?
San Francisco (E24): Since Henry Ford developed the assembly line more than a hundred years ago, global production systems have worked on the same model: Raw materials are sent to factories that mass produce the goods, which are then shipped out to the world again.
Effective and cheap – but far from a hassle, as the past 18 months have shown.
Stalled planes, closed ports and explosive demand brought global commerce to its knees, not helped by the halt of one of the world’s largest container ships and the six-day closure of the Suez Canal in March.
Over the past year, the average price for moving a container has increased from $1,300 to $11,100, according to Fritos Freight Tracking Company.
A chaos that developed over a 40-year period, according to University of Tennessee logistics professor Thomas Goldsby.
“We designed supply chains that span the world and depend on critical bottlenecks, and they had little tolerance for changes in demand or supply disruptions,” he says.
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Now is the time to mature for a change, says Norwegian Espen Seifertsen, founder of Silicon Valley-based technology company Evaldi. The revolution in the production chain with the help of digitization can make the system faster, better and more environmentally friendly, he points out:
It’s a nicer tech egg.
the doll is gone
It was not a given that Espen Sivertsen would enter the tech industry; He is a trained psychologist and chaos pilot. But an 11-hour flight changed everything, when somewhere between Paris and San Francisco he met an American woman who later became his wife.
After his marriage in 2011, he moved to the Silicon Valley area, where he began attending several pirate events while awaiting a work permit.
— Then I found out my neighbor had made his own 3D printer, he says.
And then it’s over.
In 2012, Sivertsen started his first 3D-printing company, before a sensation “as all the guys and their dogs built 3D printers to sell”. There were high expectations for this technology at this time, but it did not take off, in part due to higher costs.
Sivertsen was one of several companies that took the first 3D printing wave.
Shortly after closing in 2016, he sat in Palo Alto and had a few beers with Yngve Tvedt, who founded tech investor Norselab alongside, among others, Aksel Lund Svindal.
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Sivertsen spoke about his experiences and talked about how 3D printers and other production robots are getting cheaper and cheaper – and better and better.
“Eventually we started talking about what this means for the global supply chain and that logistics doesn’t have to be what it used to be,” Sivertsen says.
They concluded that instead of mass-producing goods in a factory and then physically sending them around the world, one could “print” things locally using a digital warehouse.
The idea behind Ivaldi was born.
In November of the same year, they set out to see how the supply chain would change, and soon began collaborating with major Norwegian offshore players who joined the ownership side of Ivaldi, including the Odfjell family, EGD and Wilhelmsen, the latter also being the first customer and partner.
The goal was to do the same for heavy industry as Spotify for the music industry and Netflix for the movie industry did: digitize logistics.
Ivaldi is now facilitating the digital inventory and local printing of spare parts for companies in, among others, the shipping and mining industry.
– Huge potential
This is currently a topic of great interest in the industry, according to Professor Thomas Goldsby.
The ability to produce what is needed, when needed, in a short time, has huge potential to revolutionize the game now, he says.
It is reported that companies such as General Electric have spent billions of dollars researching this type of spare parts production.
At Ivaldi, they noticed the increased enthusiasm.
– We’re now testing that some of the biggest companies in the world are calling us and saying “what you’re actually doing is very relevant to us, how do we go about doing something like that?” , says Commercial Director Gro Eirin Dyrnes.
She followed the company from a distance for a number of years as Head of Innovation Norway in Silicon Valley. In January, she took the step into management, at the same time she joined in as a partner with investor Norselab.
“I’ve always been very fascinated by seeing them,” she says.
So far, the company’s growth has been “more organic than exponential,” but it will likely double its revenue this year, and they expect a sevenfold increase next year, according to general manager Espen Seifertsen.
This summer they announced a partnership with Anglo American Mining, one of the world’s largest mining companies.
The ability to send files — not physical parts — will reduce your carbon footprint, delivery time and logistical costs, the company’s head of social and economic development, Matthew Chadwick, says in a statement about the collaboration.
Additionally, he asserts, it can help create local job opportunities.
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Logistics professor Thomas Goldsby describes parts production as “Step 2” for the 3D printing industry, where “Step 1” was experimenting with technology and developing prototypes.
There are several reasons why spare parts are a natural place to start.
- It is impossible to know in advance what kind of parts are needed, usually the shipping time is at least 4-6 weeks. Some parts are inaccessible due to . long life.
- At the same time, a shortage of spare parts can lead to production interruptions, which can cost up to $9,000 per minute in heavy industries.
- Therefore, it is common for parts to be pre-made and stored, but many are left unused. Equinor, for example, has 27 billion NOK values in stock. 80 percent of those are never used, Brede Lærum states at Equinor Halfbulls. So they also work using 3D printing technology.
3D printing is still more expensive than mass production, but it is important to consider alternative costs, such as long delivery time and lack of a spare part, notes Håkon Ellekjær, head of 3D printing at Wilhelmsen.
They have already printed “hundreds” of parts for the shipping industry, many in collaboration with Ivaldi.
– But perhaps what is most interesting is the potential in this, he says by phone from Singapore.
Technology is constantly getting cheaper, better, and faster. The range of what will be possible to print will increase significantly in the future.
It can change the rules of the game
Today, Ivaldi digitizes an average of eight percent of its customers’ stocks, and despite the steep price drop so far, it’s still costs that make the stake so small.
— but even eight percent makes up several hundred million dollars for some of our largest clients, notes entrepreneur Espen Seifertsen.
The 3D printing market is expected to grow from $12.6 billion this year to $34.8 billion in 2026, according to a report. When it really starts to get interesting, says University of Tennessee logistics professor Thomas Goldsby, is the time when we can also move beyond parts production.
It will be a game-changer in the speculative supply chain, where products are made based on expected demand, he says.
Goldsby says the idea of producing what’s needed, when it’s needed, and when it’s needed, will completely change this game.
Think about how that would reduce the climate footprint, he points out. In addition to reductions in non-essential production, significant transportation emissions will disappear.
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Espen Seifertsen says production via 3D printing also uses materials more efficiently, because products are “printed” layer by layer, and recycling can be much easier.
– It is very expensive if you have to send the raw materials to a completely different place, but if you can do it locally, it becomes very cost-effective.
Professor Tom Goldsby would like to stress that crises – like now global trade – now also provide opportunities.
“I hope we have the wisdom to see and pursue these opportunities,” he says.
Willie Shih, a Harvard professor and logistics expert, is more skeptical about how technology could change global trade.
– There’s a lot of noise around it now. I think there is a lot of potential. The real question, he says, is where are we going to get more mobile production.
Xie believes that if long-distance shipping of goods is still cheaper, not much will change.
– It’s all about the cost.
However, if Ivaldi founder Espen Sivertsen’s vision becomes a reality, with local production centers linked to digital stocks, ironically the technology will turn us back in time, before centralized production, he points out.
In any case, he will do his part to digitize as much of the world’s inventory as possible.
We cannot continue with the logistics we have today if we want to have a world tomorrow, he says.
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