Hyperloop – Revolution or just hype?

Staying abreast of future developments that have the potential to disrupt an organization is a critical element of our risk management and innovation value proposition.  

So in this blog, we explore some of the impact that Hyperloop – A futuristic transport system – might have on our organizations.

What about Hyperloop meaning? The technology is pretty easy to understand. Take a long tube and suck the air out.  Then balance a transportation pod above a track using magnetic levitation so that there are no moving parts or friction.   The result?  A vehicle that can move at 760mph (1200kmph) or more. Meaning people and goods could move from Los Angeles to New York or Edinburgh to London in 45 minutes.

Well… putting aside the infrastructure, you have two main costs:  

How hyperloop works? Creating the vacuum is relatively low.  Each pod moves through an airlock before entering the de-pressurized tube which means that the vacuum-pump cost per pod can be small however long the journey.

The mag-lev energy required to lift and drive the pod is more costly… but, many of the prime transport routes pass through vast flat plains which have high levels of sunlight… 

The concept is that solar panels will be built into the tube and will support a large proportion of the energy needed (although 100% solar is unlikely).  That means that the cost to power a pod during the journey could also be remarkably cheap. 

What about Hyperloop environmental impact? A cheap, renewable-powered, faster than air-travel and environmentally friendly method of transport? It sounds too good to be true!

At first sight, the concept might seem outrageous, but actually, many of hyperloop claims are supported by independent studies and tests.   A US Department of Transport study in 2017 estimated that the energy required for hyperloop transport would be a sixth of air transport and a third of High Speed rail.  In testing, Korean hyperloop pods have already reached 1000kmph.

There are other benefits too – reduction in noise, road traffic, accidents and pollution. Speedier and weather-proof journeys directly to the heart of cities and productivity gains by shortening the supply chain. 

So what would it mean for Supply Chain & Procurement Trends, if we were able to get from London to New York in 54 minutes?

For Procurement it may change the sourcing strategy. When suppliers in Mexico City can deliver their goods to Toronto, in the same time as it takes to drive a truck from Montreal, the world of sourcing becomes much wider.

It also has implications for real-estate.  Staff could reasonably commute from much further away or more likely to dedicated hot spots clustered around hyperloop terminals. Creating highly desirable business clusters like Silicon Valley in California or Zug in Switzerland.

What is a Hyperloop? Similarly, for Supply Chain, hyperloop would disrupt the current distribution models. When all of Europe is less than 2 hours away by hyperloop, a central distribution hub in a low cost location could serve the whole continent, and local last mile providers would carry the goods to the final destination.

Although hyperloop is initially being developed for city to city routes, the ultimate benefit will be the ability to deliver pods to secondary destinations. A hyperloop spur to spur network means that transport pods could be routed anywhere in the network without costly handling at transhipment points.

Well, probably not, although it is still too early for that answer to be convincing.

Test tracks have proven the feasibility.  Development for commercial pilot routes is under way in India, Switzerland, Saudi Arabia, USA and China.  Governments, environmentalists and supply chain experts are excited by the prospect.

As a result, my intuition suggests that some form of hyperloop transport will happen, supported by underlying drivers of supply chain speed, environmental concerns and international connectedness.

But I’m sceptical about the degree with which it will be deployed and the speed of roll out.

I sense much of the same excitement as when Shanghai launched its maglev train.  First opened at the end of 2002 and running between the outlying Pudong Airport and the centre of Shanghai, it was touted as being the start of a new high speed maglev network connecting Shanghai to Beijing and cities to the west.   Despite the enthusiastic launch, and successful running at over 400 kmph, the Shanghai maglev has never delivered the expansion.  

Even today, some 18 years after the first commercial trains, it continues to lose money and has not expanded to other parts of the city let alone the rest of the country.  Japan and Korea, alone have continued to expand their maglev train track.

There are also some major counter-trends that mean the technology may never make it past the pilot stage.

Terrorism: Because of the vacuum pressures on the tube a single hole, anywhere on the network would most likely create a catastrophic failure.  Given that this could occur anywhere along the length, an attack or unforeseen accident is virtually impossible to prevent. 

Changing attitudes to travel:  Business and leisure travel disruption caused by the pandemic will certainly bounce back, but working from home and environmental concerns are likely to suppress demand.  This would make the payback for any infrastructure even longer than when the Alpha concept was proposed by Elon Musk in 2012.

Cost & Inertia: This is probably the largest issue – the up-front infrastructure investment is huge and it may be that hyperloop never achieves the critical mass to become viable.  In the face of driver-less trucks and existing high speed rail, the additional advantage may simply not be worth the cost.  Although cheaper per mile to construct than new High Speed Rail networks, the overall infrastructure budget requires a massive leap of faith by politicians and investors.

Although the technology is still some way off, procurement and supply chain teams need to be aware of developments.  As will all bleeding edge technology, there will be some early adopters who will win massive competitive advantage, while others will make ill-advised decisions that will be very costly.

In prospective hyperloop areas, procurement & supply chain have a role to play in securing capacity.  Early movers are likely to be able to agree competitive rates and may be able to influence advantageous locations and access to terminals.

As soon as any construction starts, Supply chain should re-assess any long term distribution strategies.  In the light of 1000kmph routes, does that change the investment case for large regional warehouses?

And then there is the demand that hyperloop technology will place on the existing supply chain.  Rare earth minerals and metals needed for battery storage and levitation magnets are likely to sky-rocket in price as hyperloop consumes the available capacity.  

Will this new mode of transport ever fly?  The jury is still out, but keep an eye on the developments!