Christopher Cook, General Manager for UAE, Oman and Qatar, Maersk |
On the role of the shipping industry in building resilient supply chains and achieving climate goals
What impact are today’s operational challenges having on the maritime industry?
CHRISTOPHER COOK: There are bottlenecks all along the supply chain – port traffic causing vessel delays, availability of trucks and drivers, and congestion in warehouses, among others. Globally, the effective capacity of ships and equipment is limited to around 15% due to landside disruptions, causing ships and containers to wait outside ports for longer periods of time. This increases the duration of operations and the dwell time of containers already slowed down by the congestion of warehouses. Additionally, a shift in shopping habits towards online sales is also causing disruption. The imbalance between demand and supply, combined with the restrictions linked to the Covid-19 pandemic which created bottlenecks in the logistics infrastructure, led to a shortage of containers and space for ships.
The current level of freight rates is a consequence of these disturbances. Long-term freight rates are traditionally insulated from market dynamics and not as impacted as short-term contract rates. Naturally, this is reflected in the revenues of ocean carriers. However, as part of Maersk’s strategy, the focus is on expanding and building a portfolio of long-term contracts so that our customers benefit from greater price transparency over the horizon. It also helps us plan operations efficiently, with better forecasts.
What are the top priorities for your business and the shipping industry as a whole as the sector adjusts to the post-pandemic future?
TO COOK: A strong focus on operational resilience and adapting to changing means of engagement between shippers and customers will continue to be important as the industry moves forward in a post-pandemic world. At the height of the health crisis, shippers had the responsibility of guaranteeing the supply of personal protective equipment, food and pharmaceuticals. Ensuring uninterrupted operations across all links of the supply chain has been a priority, and the innovation that has resulted from these challenges should continue.
Along with building more resilient systems, the increasing complexity of global trade – each sector having its own characteristics – calls for the development of sector-specific solutions and the modernization of logistics infrastructures to offer more flexibility to customers. For Maersk in the GCC, this has led us to strengthen our integrated container logistics solutions.
Beyond physical infrastructure, accelerated digitization will result in significant efficiencies in inventory management, track and trace, and visibility, and provide a deeper understanding of challenges and opportunities through to richer dashboards.
How well placed are shippers to contribute to global climate efforts?
TO COOK: While the United Nations International Maritime Organization’s target of halving greenhouse gas emissions from the shipping industry by 2050 is on track, achieving this target will require all stakeholders agree on clear steps to move forward. In this context, maritime transport will not be able to support climate objectives as long as fossil fuels are cheaper than green fuels. The introduction of a global carbon tax would help bring about change in this area.
Our emissions targets should align the company with the net zero criteria of the Science Based Targets initiative pathway to limit global warming to 1.5°C. These stipulations include a societal commitment to act now, to have a material impact in this decade, and to deliver net zero supply chains to customers by 2040.
To maximize progress towards net zero supply chains by 2040, 2030 targets have been introduced for a range of green product offerings. These products will use green technologies and solutions to ensure real emission reductions within the supply chain. It will also be important to address indirect emissions, i.e. those emitted by land transport and shipbuilding services provided by third-party suppliers, for example. Meeting this challenge will require a lot of data and close collaboration with local and regional suppliers of products and services.