♦ Taiwan’s big 3 ocean shippers hitting it big, but what’s next?

1. MSC is poised to overtake Maersk soon in terms of TEU in operation. What strategies has MSC adopted to get to where it is today? How important is the role of MSC's Asian operations?

Asia is a hugely important market for MSC due to the high and growing volumes of goods that are shipped between this region and other regions, as well as the rising volume of trade within intra-Asia. 

Coincidentally this year MSC celebrates 25 years of doing business in Asia. We started our first office in the region in Singapore, and we have grown from six staff in Singapore to 2,250 across 50 offices in 10 markets.  

MSC has a number of strategic port and logistics-related investments in China and southeast Asia, and a significant milestone is the company’s investments in two joint venture terminals in the region -- the Ningbo Gangji Terminal in China, which was opened in December 2004, and the MSC-PSA Asia Terminal (MPAT) in Singapore, which started operations in March 2006. 

The Ningbo Gangji Terminal, MSC’s hub port for China is strategically located in the middle of China’s coastline and is well connected to the economic areas of Yangtze River Valley. In Singapore, the number one transshipment hub globally, the MPAT has grown from three to seven berths, which also alludes to the growth in volumes MSC is shipping to and from the Asia region.

At MSC, we have always been proud of our personal, customised approach in dealing with customers. Customers know they can count on us to find a solution for problems they encounter. We also have many loyal, dedicated employees, and over half of the senior management in Asia have been with the company for more than 10 years. These colleagues form a strong foundation for our presence in the region.

2. From your decades of experience in the shipping industry, how would you explain the mess and disruption in the shipping market caused by the pandemic? From a longer-term perspective, is it an opportunity or threat to carriers?

The impact of the COVID-19 pandemic is truly unprecedented. When the pandemic broke out, the shipping sector was initially badly hit by a plunge in global demand, border closures and shortages of port workers and truck drivers. Like many other shipping companies, MSC had to cancel services on several routes. 

In the second half of last year, in line with signs of recovery, the company added capacity and started new services to cater to market demand.  However demand shot up much faster than anyone expected and this has been compounded by further challenges in different parts of the supply chain, such as insufficient supply of containers, ports being unable to cope with the strong demand due to COVID restrictions, shortage of truck drivers and port workers due to COVID, and lack of space in warehouses. 

Looking at this from a broader perspective, I think the pandemic has shown how critical the shipping industry is, and how the shipping industry has demonstrated exceptional resilience in keeping global trade flowing in spite of the multitude of challenges. It has shown carriers the importance of being flexible in our operations, adjusting our services according to the ups and downs in demand. 

I also see this as an opportunity for us to take the conversation with customers to a different level beyond price, to focus instead more on the value that we generate and services that we can offer them.

3. From both the supply and demand side perspectives, how long would this disruption last? Some argue the industry would face overcapacity again in 2023-24 when the consumption in major markets gradually shift from merchandise to service and all the new ships major carriers ordered these two years will be delivered at that time. Do you agree?   

It is very hard to predict as the global pandemic situation remains serious in many parts of the world, and COVID-related outbreaks could happen any time. For example, some port activities were suspended at the port terminals in Yantian, South China in May and June due to the emergence of a number of COVID cases, which led to congestion not just in Yantian port, but also neighbouring ports in South China, and even to some extent, other transshipment hub ports in Asia.

MSC has already started 8 new main line services in the past few months, deployed available vessel capacity and provided hundreds of thousands of additional containers to help respond to the huge demand for cargo transportation in an extremely challenging and congested market.

As a company, we also hope for some normalisation because the disruption also means that we ae deploying a larger fleet of ships and containers and burning more fuel than we normally would.

(Source: MSC)

4. After the disruption wanes down, what would the new normal for the shipping industry look like post-pandemic?

We are hoping it will be one where supply and demand will be more balanced, which means less market volatility.  
We also hope to see an improved level of service reliability, as that has no doubt been impacted due to the ongoing port congestion and supply chain issues in different parts of the world. 

With the increasing trend of digitalisation in the industry, which has been accelerated due to the global pandemic, there is also more room to use technology for more collaboration with customers and stakeholders to improve efficiencies, and to provide new digital solutions that have not been offered previously.

5. From what we’ve been reading, Maersk is transforming itself from a shipping company to an integrated logistics company. What are the main focuses of MSC’s long-term strategy? In the Greater China region in particular?

Besides continuing to grow our container shipping business with new trade services, more ships and equipment, we have also been offering new offerings to customers such as more intermodal services, smart containers, as well as more features on our eBusiness platform, myMSC.

We have been expanding our intermodal services especially in mainland China, where we have seen manufacturing ramping up in more inland parts of the country.  In the first half of the year, we have started up 6 new services in North and East China, a combination of both barge and rail-sea services, in order to cater to growing exports and imports to these inland destinations. Some of these rail-sea solutions have been offered in partnership with Chinese ports, which also show the importance of maintaining good relationships with port authorities and relevant stakeholders.

We have also noticed that in recent years, a growing number of shippers are moving containers from China to Europe over land, via rail. Against the backdrop of this trend, we launched the MSC Taiga service in April 2021, which combines MSC’s intra-Asia shipping network, our rail service in Russia and our short-sea feeder network in Europe. Shippers in Greater China who are facing issues with getting space on ocean freight services can rely on this alternative solution to move their goods from Asia to Europe.

In addition to MSC, the MSC Group has a separate company, MEDLOG, providing logistics and supply chain services, which also has business activities in mainland China. MEDLOG currently has a few solely owned and joint venture depots in China and also offers a variety of inland transportation and logistics solutions. 

(Source: MSC)

6. Decarbonization is an imminent challenge for the shipping industry. What is MSC’s blueprint? Is setting a climate target or building methanol-powered ships in the pipeline? Why?

MSC continues to invest heavily in low-carbon technologies and extensive new-build and retrofit programmes to increase efficiency and minimise environmental impact. Our latest Gülsün class of almost 24,000 Twenty-foot Equivalent Unit (TEU) ships, deployed primarily from Asia to Europe, are among the world’s largest container ships and have one of the lowest carbon footprints by design per container carried. We have taken delivery of 11 Gülsün class ships from 2019 to 2020, and we have 5 more of similar sized vessels being delivered this year. We also have an ongoing retrofitting programme for our existing fleet to reduce emissions, increase efficiency and minimise fuel consumption.

MSC is also actively exploring and trialing the use of alternative fuels that will help to further reduce CO2 and other GHG emissions from our fleet. The company has pioneered the use of up to 47% responsibly-sourced biofuel blends at scale within the existing fleet. We are looking at all possible options, such as hydrogen derived fuels, methanol as marine fuel and the significant potential benefits of progressing from fossil-based LNG to bio-LNG or synthetic variants.  

Our focus is on finding the pathway to develop new fuel and technology solutions that can be scaleable, and technically and economically viable. 

MSC’s efforts to decarbonise include strong partnerships with a range of companies across the industry. In addition to contributing to the work of industry groups and associations, MSC has recently entered into a partnership with Shell to catalyse low-carbon solutions for the shipping sector.

7. A recent FT article mentioned that one of the new CEO’s focuses is likely to be optimizing MSC’s global network. What would be East Asia and Taiwan’s position in this optimization? What are the plans like to work with Taiwan’s Evergreen, Yang Ming, or Wan Hai Lines? 

MSC is constantly keeping our eyes on the market and adjusting our network according to the needs of the market. For Greater China, our main export and import markets include Europe and the United States. We have nothing to announce about working with other carriers, but here are some interesting recent developments about our service network.

We have launched several new services from Asia to the different regions in the past year. Shippers in Greater China can benefit from the direct connections to ports on the US West Coast and Canada with our Santana, Sequoia and Chinook services, and our new Liberty service launched this May connects ports in China and Vietnam with US East Coast ports. 

Spurred by the continued growth in intra-Asia trade, MSC has also been introducing more services in this trade in recent years. For example, MSC’s Seahorse service launched last July provide shippers in Taiwan with direct connections from Kaohsiung to Manila in the Philippines and Vung Tau in Vietnam. We also introduced the Golden Horn service last year, our first service which connects China, Korea and Russia’s East coast. It performed so well that after two months, we added new calls at Incheon, South Korea, and three more ports in northern China.

8. What is the impact of container shipping supply chain digitization on carriers? What is MSC’s answer to the challenge?

The maritime industry is undergoing significant changes: there is a growing number of digital innovations and new technologies, but to fully realise the potential of digitalisation, there is a need to create common standards. In our opinion, new technological solutions will only be fit for purpose if they can be operated across multiple carriers, service providers and geographies.  As such, interoperability is key. 

This is a long-running trend, which inspired the establishment of the Digital Container Shipping Association (DCSA) in 2019, in which MSC is a founding member. DCSA is a neutral, non-profit group established by several of the largest container shipping companies to further digitalisation of container shipping through technology standards. Since its inception, the DCSA has been making progress towards establishing digital standards for the industry. 

We believe there is a room for greater collaboration with different industry players. For example, MSC is one of the Foundation Carriers of TradeLens, a neutral blockchain-enabled digital container logistics platform, jointly developed by A.P. Moller - Maersk and IBM. Through the platform, TradeLens customers gain access to end-to-end container transportation visibility, can collaborate with their logistics and trading partners including sharing documents on blockchain, and gain a comprehensive picture of the flow of goods. We have also been seeing an increase in queries on this platform among our customers since its availability in China in early May 2021. 

9. Asia is the region with the strongest growth in global shipping, in which markets does it stand out? And how critical is the Greater China market?

MSC has been doing business in Greater China for 23 years and we presently boast a strong network of 28 offices spread across mainland China, Hong Kong and Taiwan. MSC has 37 direct services calling at 16 ports in Greater China, providing connectivity to the different regions around the world. 

Greater China is definitely an essential part of the company’s global business due to continued growth of exports. Demand for retail and medical goods has been rising in the past year for example in the US, and recent easings in COVID-19 lockdown measures, vaccination drives around the world, and stalled factory production in other Asian countries due to new waves of COVID have led to a stronger demand for Chinese goods. 

At the same time, imports to China are growing, helped by the swift acceleration of the nation's economic recovery. Imports of products such as fruit and meat grew strongly in 2020, and MSC achieved a number of milestones last year, enabled by our expertise in shipping refrigerated goods. This includes the first-ever shipments of Chilean clementines to Hong Kong, and the first-ever shipment of avocados from Colombia to China.

10. Digitalization is another key issue facing the shipping industry. How does MSC stand out?

In today’s increasingly digital landscape, we need to be forward-thinking and adapt nimbly to the changing world around us. For these reasons, we are focusing on digitising current processes to improve operational efficiency and enhancing digital channels to propose new solutions to customers.

Recently in April 2021, we launched the MSC Electronic Bill of Lading (eBL), where parties involved in a cargo shipment booking can manage the bill of lading (BL) electronically through a blockchain platform, in a quick and cost-efficient manner. The BL is the most important transport document in international trade, and as a result of the ongoing pandemic, there have been limitations on flights, delays in courier services and receipt of couriered documents with people working from home, so our MSC eBL solution comes in handy to mitigate these issues.

MSC conducted trials with customers from selected markets including China, before this was officially rolled out, and Chinese customers who took part in our eBL trials find it to be convenient, easy to use, safer and faster for their transactions. Since the official launch, we have also seen a significant increase in the number of customer sign-ups.

Besides new digital products, we are prioritising developments to our global eBusiness portal, myMSC, to promote greater transparency and control for our customers. This includes an Instant Quote function which allows customers to get real-time shipping rates for container bookings in just a few seconds. 

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♦ Taiwan’s big 3 ocean shippers hitting it big, but what’s next?
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