Christopher Cook, Managing Director for the UAE, Oman and Qatar, Maersk

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On the shipping industry’s role in building resilient supply chains and achieving climate goals

What impact are ongoing operational challenges having on the maritime industry?

CHRISTOPHER COOK: There are bottlenecks throughout the entire supply chain – traffic at ports that cause vessel delays, the availability of trucks and drivers, and congestion at warehouses, among others. Globally, the effective vessel and equipment capacity is constrained at an estimated 15% due to landside disruptions, leading to vessels and containers waiting outside ports for longer periods of time. This increases the duration of operations and dwell time for containers already slowed by congestion at warehouses. Moreover, a shift in purchasing patterns to online sales is also causing disruptions. The imbalance between demand and supply, combined with the Covid-19-pandemic-driven restrictions that have created bottlenecks in logistics infrastructure, has led to a shortage of containers and vessel space. 

The current level of freight rates is a consequence of these disruptions. Long-term freight rates are traditionally insulated from market dynamics and are not as impacted as short-term contract rates. Naturally, this is reflected in the earnings of ocean carriers. However, as a part of Maersk’s strategy, there is an intensive focus on expanding and building a long-term contract portfolio so that our customers have higher transparency of rates over the horizon. It also helps us plan operations efficiently, with better forecasts. 
 
Which are the key priorities for your company and the shipping industry as a whole as the sector adapts to the post-pandemic future?
 
COOK: A strong focus on operational resilience and adaptation to shifting means of engagement between shippers and clients will continue to be important as the industry moves forward in a post-pandemic world. At the height of the health crisis, shippers had a responsibility to guarantee the supply of personal protective equipment, food and pharmaceuticals. Ensuring uninterrupted operations across all links in the supply chain has been a priority, and the innovation that arose from these challenges is expected to continue. 
 
Together with building more resilient systems, the increasing complexity of global trade – with each sector having its own characteristics – calls for developing sector-specific solutions and upgrading logistics infrastructure to provide clients with more flexibility. For Maersk in the GCC, this has led us to reinforce our integrated container logistics solutions.
 
Beyond physical infrastructure, accelerated digitalisation will result in significant efficiency gains in terms of inventory management, tracking and tracing, and visibility, and will provide more insightful understanding of challenges and opportunities through richer dashboards. 
 
To what extent are shippers well positioned to contribute to global climate efforts?
 
COOK: While the UN International Maritime Organisation’s goal of halving the shipping industry’s greenhouse gas emissions by 2050 is on the right track, meeting this target will require all stakeholders to agree on clear measures to move ahead. In this context, shipping will be unable to support climate goals as long as fossil fuels are cheaper than green fuels. The introduction of a global carbon tax would help to bring change in this area. 

Our emissions targets are expected to align the company with the net-zero criteria of the Science Based Targets initiative’s pathway to limit global warming to 1.5°C. These stipulations include a societal commitment to act now, drive material impact in this decade and deliver net-zero supply chains to customers by 2040.

To maximise progress towards net-zero supply chains by 2040, 2030 targets have been introduced for a range of green product offerings. These products will utilise green technologies and solutions to ensure real emission reductions within the supply chain are made. It will also be important to address indirect emissions, or those that are released by inland transport and vessel-building services that third-party suppliers provide, for example. Tackling this challenge will require extensive data and close collaboration with local and regional suppliers of products and services.

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