How the second-largest container shipping company in the world is helping to meet global demand amid turbulent times
It has been a challenging year for shipping lines as they transport a wide range of goods, including life-saving pharmaceutical products, important agricultural goods, raw materials as well as foods and beverages, amid Covid-19 lockdowns and safety restrictions. The recent Suez Canal incident, where a gigantic container ship that ran aground blocked hundreds of ships from passing through the waterway for close to a week, looks set to exacerbate delays and disruption wrought by the pandemic.
MSC Mediterranean Shipping Company, the second-largest container shipping company in the world, expects the incident to result in a constriction of capacity, adding continued pressure on shipping and port networks in the second quarter of this year. The company is doing its utmost to manage delivery of cargoes in the best way possible and has been working closely with its customers on the schedule changes.
Asian presence anchored in Singapore
Geneva-headquartered and family-owned MSC, which set up its office in Singapore in April 1996, has been servicing customers in Asia for 25 years.
“In 1996, MSC was already fairly well established in other regions. Starting up business operations in Asia was really the last connecting link for MSC’s global ambition,” says Mr Tan Yock Juee, managing director of MSC’s Asia Regional Office. “Asia was the last piece of the jigsaw, and with the opening of the Singapore office, the company’s global ambition was fulfilled.”
The company has grown its Asian presence from six staff in Singapore in 1996 to 2,250 across 50 offices in 10 markets today. Many of the employees, including those in the pioneer batch who joined MSC since the establishment of local business operations, are still with the company.
“We have many loyal, dedicated employees. Over half of the senior management in the region have been with the company for more than 10 years. These colleagues form a strong foundation for our presence in Asia,” he adds.
“We have a number of strategic port and logistics-related investments in China and South-east Asia. Given the importance of Singapore as the number one transshipment hub globally, there was a strong rationale for us to set up a joint-venture terminal with PSA International. From 2006, the terminal has grown from three to seven berths, which also alludes to the growth in volumes we are shipping to and from the region,” says Mr Tan.
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. “Nobody could have predicted the massive swings in market demand in 2020 and into the start of 2021, which has led to an industrywide shortage of containers,” adds Ms Grace Chia, commercial general manager, MSC’s Asia Regional Office.
“We work closely with our customers and partners on enhanced forecasting and visibility of their volumes. We are also maximising equipment availability by deploying all available containers, as well as quick turnover and repositioning of empties,” she notes.
The pickup is very apparent in Asia, largely due to the high export volumes of furniture, foodstuff, toys and electronics from China and South-east Asia to the United States (US). In March, MSC announced the launch of new services linking South-east Asia and China to the west and east coasts of the US.
China’s quick rebound meant a resumption of factory activities, which led to growth in the imports of raw materials such as iron ore and timber, and the consequent increase in exports to key markets like Europe and the US.
With more companies seeking to diversify supply chain risks, MSC also expects to see further growth in intra-Asia trade and has been starting new services intra-regionally. “We are seeing an increased flow of components, raw materials and semi-finished goods that are being shipped between countries in Asia, before the finished products are shipped out to other regions,” says Ms Chia.
Rising demand for refrigerated cargo
Buoyed by demand for foods, drinks, pharmaceuticals and other temperature-sensitive products, the volume of reefer cargo, as these refrigerated goods are called, expanded 3.4 per cent in 2019 to 5.3 million Forty-foot Equivalent Unit (FEU). It is set to grow 5 per cent annually leading up to 2024, according to maritime research consultancy Drewry.
To meet the greater demand for cold-chain delivery, MSC expanded its shipments of refrigerated containers. Just last year alone, it transported more than 1.9 million reefer containers.
The surge has generated high volumes on major routes connecting Europe and Asia, as well as opened new markets for suppliers of fresh produce, such as those in Latin America and China, with new bilateral trade agreements.
MSC recorded a number of milestones last year, including the first-ever shipments of Chilean clementines to Hong Kong. It also delivered the first-ever shipment of avocados from Colombia to China, traversing through 16,483km of sea route for over a month, a journey made possible through MSC’s advanced reefer technology.
Embracing digitalisation and sustainability
The pandemic has not only exposed vulnerabilities in global supply chains, but also underscored the importance of accelerating the use of technology and advancements in digitalisation for the shipping industry.
MSC is one of the pioneers behind the industry’s digital transformation, and is actively involved in major industry initiatives such as the Digital Container Shipping Association (DCSA), a neutral, non-profit group established in 2019 to further digitalisation efforts in the industry.
Mr André Simha, MSC’s global chief digital and information officer and chairman of the supervisory board of DCSA, will be participating in an online panel session on digital transformation during this year’s Singapore Maritime Week. The webinar, which is organised by TOC Events, will take place on April 21.
Says Ms Chia: “We are prioritising developments to our eBusiness solutions to promote greater transparency and control for our customers. Last July, we launched an online tool that allows customers to get real-time shipping rates for container bookings in just a few seconds. We are also making advances in blockchain-enabled paperless trade, partnering customers on trials of electronic bills of lading in countries such as Vietnam, China, Thailand and Indonesia.”
Even during times like these, MSC has not wavered from its commitment to continue investing in sustainability. Just recently, the company reaffirmed its position to avoid Arctic cargo routes on environmental grounds.
MSC is also working hard to further reduce its footprint by investing heavily in a modern, efficient fleet and low-carbon technologies. Its latest Gülsün class of 23,000+ Twenty-foot Equivalent Unit (TEU) ships is among the most energy-efficient mega container vessels.
Other initiatives include pioneering the large-scale use of responsibly-sourced biofuel blends on container vessels, exploring the use of hydrogen-derived fuels and other alternative fuels as well as switching to shoreside electrical power to reduce emissions wherever the infrastructure allows. The company also takes part in Singapore’s Green Port Programme, an initiative to encourage environmental sustainability among ocean-going vessels calling at the Port of Singapore.
Visit msc.com to find out more about how MSC’s services and expertise can help your company to keep its goods moving.
Source: Business Times
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