The Coronavirus pandemic not only severely disrupted the working of supply chains across the globe but also reshaped them. Playing a big hand in it was the COVID-driven market volatility coupled with changing consumer and business behaviours. As the pandemic sent shockwaves through the supply chain, collaborations with carriers that provide flexible, tech-driven integrated solutions seemed to be the only solution to inject resilience. Maersk – an integrated container logistics and supply chain company – in these difficult times, helped its consumers wade through the changes and minimize risk and increase stability. In this exclusive interview, Vikash Agarwal, MD-South Asia, A P Moller Maersk talks about easing supply chain woes, Maersk’s intention of acquiring Senator International and making it strong in the air freight market, meeting consumer needs through a holistic approach, the current situation of the Indian shipping market and much more.
Container lines are now adopting a more holistic approach powered by technology to enable end-to-end logistics. How is Maersk enabling end-to-end logistics solutions and meeting consumer needs and requirements across the supply chain?
A few years ago, Maersk began its journey to be an integrator of container logistics. Over the period, this strategy shaped itself to serve the customers better by connecting and simplifying their supply chains. Maersk operates across three main businesses of ocean transportation, logistics & services, and terminals. Customer and operational synergies allow these three businesses to get interlinked between each other and all of them are bound by technology as we prepare for tomorrow.
If we look at our customers’ supply chains today, they are mainly divided into three modules – origin services that include shipment from the source such as a factory, export customs, and warehousing, transportation that includes the movement from the country of origin to country of destination by the ocean, rail or air and destination services that include the import customs clearance, warehousing, landside transportation, and final delivery. Our ambition is to create customer value by integrating these modules and leveraging the strength of the network to provide resilient, flexible, and efficient supply chains that run end-to-end for our customers. Using technology and our operation control throughout the entire journey of cargo, we aim to deliver an improved experience and reduced complexity for our customers.
We are building operational capabilities, creating value propositions that accommodate customers’ individual preferences using technology, and becoming a single point of accountability to deliver an outcome through operational excellence. Ultimately, we also want to lower the end-to-end actual cost over time for our customers.
A simple yet extremely strong example of using technology for an end-to-end solution for our customers would be our platform Maersk. com. Today our customers can get quotes for their shipment, carry out bookings, get instant confirmation, track their cargo in its journey, submit documentation and complete their payments – all from a single platform of Maersk.com.
Recently Maersk announced the intended acquisition of Senator International a well-renowned global freight forwarding company with a strong air freight offering. How will this acquisition benefit the global integrated logistics solution provider?
With our focus on connecting and simplifying our customers’ end-to-end supply chain worldwide, we are looking beyond organic growth to achieve our vision as a global integrator. In some areas, inorganic growth opportunities will enable us to build the capabilities needed in various parts of the Logistics & Services segment and harvest synergies across the supply chain.
Airfreight is a crucial enabler of flexibility and agility in global supply chains as it allows companies to tackle time-critical supply chain challenges and provides transport mode options for high-value cargo. To better cater to such customers´ needs, we aim to increase our presence in the global air cargo industry. And to accelerate our product offering which integrates Logistics, Ocean, Rail, and Air and expand our global air network, we have announced the intention to acquire Senator International, a company with a renowned operational air freight platform of own controlled capacity and operations across Europe, Asia, South Africa, and America.
Our ambition is to become our customers’ airfreight partner of choice, meeting their needs through a robust air freight network and providing own-controlled capacity air products. To this effect, we are also purchasing two and leasing three new cargo planes that will be operated by our cargo airline Star Air.
The International Maritime Organization (IMO) – the UN body charged with delivering international shipping’s strategy on tackling climate change – has a target to cut emissions by 50% by 2050. Kindly throw some light on AP Moller Maersk’s participation in driving demand for Carbon-neutral solutions?
A P Moller – Maersk is committed to ensuring that our business practices are safe, responsible, and transparent, in accordance with our core values and the principles of the UN Global Compact on human rights, labour rights, environment, and anti-corruption, and contributing to the UN Sustainable Development Goals. In line with this, decarbonizing logistics is the single most important strategic sustainability priority for us.
We have a 2050 net-zero ambition for shipping and while it is a challenging target, we truly think that it is a possible one to reach. We have reduced our relative CO2 emissions by over 46% since 2008, making further progress towards our 2030 target of 60% reduction.
Earlier this year, we announced that we will have our first carbon-neutral container vessel fully operational by 2023, seven years ahead of our initial ambition of 2030. From 2024, we will also introduce 8 large ocean-going container vessels capable of being operated on carbon neutral methanol. We also made a supply agreement with Danish company RE Integrate on the supply of 10K tons of green methanol for the feeder’s vessel and are still on the lookout for an additional 280,000-360,000 tons of green methanol for the next eight vessels.
To ensure the supply of sustainable fuels, we have recently invested in several companies that have the expertise, such as:
o California-based WasteFuel, a start-up focused on turning waste into sustainable aviation fuel,
green bio-methanol, and renewable natural gas
o Prometheus Fuels, a Silicon Valley-based startup with a promising direct air capture technology to enable cost-efficient, carbon-neutral fuels for shipping
o Vertoro – a Dutch start-up focused on developing liquid lignin technology which can be used as a marine fuel
A P Moller – Maersk is also the founding member of the ‘Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping’ – a research centre that will lead the way for decarbonizing shipping. The centre is a non-profit organization, set up as a commercial foundation with a charitable purpose.
As an independent research centre, it works across the entire shipping sector with industry, academia, and authorities. A highly specialized, cross-disciplinary team collaborates globally to create overviews of decarbonization pathways, accelerate the development of selected decarbonizing fuels and power technologies, and support the establishment of regulatory, financial, and commercial means to enable transformation.
In India, we are making a lot of local efforts to achieve a lower carbon footprint in the services we offer to our customers. For example, we are converting a lot of cargo movement from road to rail, which besides being quicker in transit times and more reliable on schedules, also contributes greatly towards reducing carbon footprint.