New Articles

A Tough Year on the Water Hasn’t Dampened Innovation for these Ocean Carriers

ocean

A Tough Year on the Water Hasn’t Dampened Innovation for these Ocean Carriers

To say that 2019 has been challenging for ocean carriers would be an understatement. The year began with the National Retail Federation forecasting a decline in year-over-year growth, echoing World Bank chatter of a slowing global economy.

And don’t forget the tariff wars between the U.S. and China (heck, the U.S. and just about anyone). Managing capacity on ships has also been an issue, and then there is the potential biggest bogeyman of all: the International Maritime Organization’s low-sulfur fuel mandate taking effect Jan. 1, 2020.

Sure, we could dwell on the gloom and doom, but that would not be very Global Trade magazine of us, now would it? We here in our silky ivory tower like to spotlight the positive, which we reveal with these ocean shippers we love.

MSC

Mediterranean Shipping Co. this year watched the world’s largest container ship, the MSC Gülsün, complete its maiden voyage from northern China to Europe. With a width of 197 feet and a length of 1,312 feet (!), the Gülsün was built by Samsung Heavy Industries at the Geoje shipyard in South Korea. It can carry up to 23,756 TEUs shipping containers on one haul. That capacity can include 2,000 refrigerated containers for shipping food, beverages, pharmaceuticals or any other chilled and frozen cargoes. That’s a lot of snow cones!

MOL

Mitsui O.S.K. Lines sees MSC Gülsün and raises you the MOL Triumph, which achieved a new world load record this year. Departing Singapore for Northern Europe on THE Alliance’s FE2 service with a cargo of 19,190 TEU. That surpassed the previous load record achieved in August 2018, when Mumbai Maersk sailed from Tanjung Pelepas to Rotterdam with 19,038 TEU onboard. Yes, you are correct, that’s a pretty slim margin of victory, and analysts suspect the MOL Triumph record won’t last long given the 23,000 TEU ships being introduced.

HYUNDAI MERCHANT MARINE 

Speaking of THE Alliance, current members Hapag-Lloyd, ONE and Yang Ming will be joined in April 2020 by Hyundai Merchant Marine (HMM). The South Korean carrier recently signed an agreement to join THE Alliance and then passed the pen to the founding members, who extended the duration of their collaboration until 2030. “HMM is a great fit for THE Alliance as it will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient,” said Rolf Habben Jansen, Hapag-Lloyd’s chief executive. 

HAPAG-LLOYD

Oh, speaking of the fifth-largest container shipping company in the world, Hapag-Lloyd is piloting an online insurance product as part of a digital offering to try to overcome the widespread practice of shippers relying on the limited cover provided under the terms of carriers’ bills of lading. While Hapag-Lloyd says it takes the utmost care in transporting cargo, company officials acknowledge things can and have gone wrong. Thus, the introduction of Quick Cargo Insurance, which is underwritten by industrial insurer Chubb in Germany and is limited to containerized exports from that country, France and the Netherlands. However, the carrier says it plans to expand the offer.  

MAERSK

To navigate new environmental regulations, A.P. Moller-Maersk A/S is considering going old school. We mean really old school by using a modern version of the old-fashioned sail to help power its ships. Currently being tested on one of Maersk’s giant tankers, the sails look less like the flapping silk you know from Johnny Depp movies and Jerry Seinfeld’s puffy shirt and more like huge marble columns. But they are nothing to laugh at as two 10-story-tall cylinders can harness enough wind to replace 20 percent of the ship’s fossil fuels, according to their maker, Norsepower Oy Ltd. 

MOL, THE SEQUEL

While we’re getting all green up in here, it’s worth also pointing out that Mitsui O.S.K. Lines Ltd. This year joined three other Japanese companies— Asahi Tanker Co., Exeno Yamamizu Corp., and Mitsubishi Corp.—in teaming up to build the world’s first zero-emission tanker by mid-2021. Their joint venture e5 Lab Inc. will power the vessel with large-capacity batteries and operate in Tokyo Bay, according to a statement the foursome released on Aug. 6. Thanks to the onslaught of legislation to improve environmental performance, other companies are also looking to battery power. Norway’s Kongsberg Gruppen is developing an electric container vessel, and Rolls-Royce Holdings last year that started offering battery-powered ship engines.

AMAZON

No, this is not a leftover strand from a different story in this magazine about moving packages on the ground. “Quietly and below the radar,” USA Today recently reported, “Amazon has been ramping up its ocean shipping service, sending close to 4.7 million cartons of consumers goods from China to the United States over the past year, records show.” While other ocean carrier leaders prepare for the bald head of Jeff Bezos, his move really should be no surprise given Amazon’s attempt to control as much of its transportation network as possible. (See my September-October issue story “Air War: Fast, Free Shipping has UPS, FedEx and Amazon Scrambling in the Air”). Of Amazon now floating into the sea, Steve Ferreira, CEO of Ocean Audit, a company that utilizes data and machine learning to find ocean freight refunds for the Fortune 500, told USA Today: “This makes them the only e-commerce company that is able to do the whole transaction from end-to-end. Amazon now has a closed ecosystem.” 

OUR TOP TEN LIST: THESE SHIPPING COMPANIES CONTROL NEARLY 75% OF THE MARKET

Container shipping continues to be a major means of cargo transportation in 2019. While there does not exist an outright monopoly by any one shipping company, there are presently 10 that control nearly 75 percent of the market, and of those 10, four that maintain over 10 percent of market share.  

APM-Maersk

With 80,000-plus employees and coming off a major reshuffle, APM-Maersk survived one of the biggest layoffs in company history roughly four years ago. A concerted effort has been made since that time to ramp up digitization and optimization changes, with the past two years especially seeing some radical changes. Søren Skou moved into a dual role as CEO of Maersk and CEO of the core Maersk business line, which are two separate entities. APM-Maersk leads the pack with a 4,058,154 shipping capacity (TEU), a 17.8 percent share of the market and sole operation of 316 ships, clearly surpassing No. 2 on the list, Mediterranean Shg Co’s 193.

Mediterranean Shg Co

The world’s second largest line, this Geneva-based company counts on Italian roots with its most important port being housed in Antwerp, Belgium. Also known as MSC, the company made news earlier this year when 291 containers plunged overboard near Borkum, a German island. Worse yet, some containers were hauling poisonous organic peroxides and ended up washing up on to Terschelling, a protected Dutch island in the UNESCO biosphere reserve. Counting on a global presence, MSC is likely not to catch APM-Maersk anytime soon but does have a respectable shipping capacity of 3,303,848 TEU.

COSCO Group

The China Ocean Shipping Group Co., commonly known as COSCO, is a state-owned concern widely considered the third largest in the world. Handling a shipping capacity of 2,782,485 TEU, COSCO commands a 12.2 percent market share, and earlier this year the Chinese firm purchased a Peruvian port, its first in South America. The $225 million deal is a strategic play to increase their share in the emerging Latin American market. But COSCO is not solely focused on Latin America as they’ve also been actively purchasing ports in Greece, the Netherlands and various Abu Dhabi terminals throughout the UAE.

CMA CGM Group

Despite global uncertainty and with U.S./China talks escalating to worrying levels, CMA CGM reported their 2018 revenues jumped more than 11 percent and 14.9 percent in the fourth quarter alone. This equated to a record $23.48 billion in revenue which is a record for the French container transportation and shipping company. However, CMA CGM is not resting on its laurels as a $1.2 billion cost-reduction plan is afoot due to geopolitical tensions. On the other end, investments in LNG-enabled vessels have been made to follow the eventual Martine Organization’s rules on emissions, set to come into effect on Jan. 1, 2020.  

Hapag-Lloyd

The world’s fifth largest shipping company with a 7.3 percent market share, Hapag-Lloyd has decided to lay low regarding the recent trend of logistics company acquisitions (something increasingly common with the leading players on this list). While most the industry is consolidating, Hapag-Lloyd has made a concerted effort to boost on-time delivery rates. Digitalization lies at the core of this strategy and Hapag-Lloyd has gone full-in to equip their control towers with the latest connections by leveraging disparate data streams in a variety and multiple formats.  

ONE (Ocean Network Express)

If there’s one record that the shipping industry respects, it’s the amount of cargo stowed. More cargo stored equates to a higher marginal return. ONE did just that in February, narrowly edging the previous record set by Maersk (19,038 TEU) in August of 2018. The Japanese company successfully carried 19,100 TEU on the MOL Tribute, a vessel with a total capacity of 20,146 TEU. In fact, prior to this record the MOL Trust and MOL Tradition also recorded record stows. ONE operates in conjunction with Hapag-Lloyd and Yang Marine Transport Corp., forming what is known as The Alliance. ONE controls 6.6 percent market share and has been climbing up the ranks as of late.

Evergreen Line

Evergreen Line is not a line at all, but rather a group composed of Evergreen Marine Corp., Italia Marittima SpA, Evergreen Marine Ltd. and Evergreen Marin (Hong Kong) Ltd. Established in 2007 in response to growing demand for a more global presence on behalf of all four founding members, in 2009 Evergreen Marine (Singapore) Pte Ltd. jumped on board, which now gives the group a 5.2 percent share of the market and a shipping capacity of 1,185,257 TEU. In February, the company welcomed in a new president, Jeffrey Chang, who is rumored to be an out-of-the-box thinker with radical, yet proven ideas. 

Yang Ming Marine Transport Corp.

Based out of Keelung, Taiwan, despite a rather recent founding (1972) this group traces its roots back to the Qing Dynasty with shipping links associated with the China Merchants Steam Navigation Co., which later became Yang Ming via a merger. With a fleet of 84 container ships and 17 bulk carriers, Yang Ming controls roughly 2.9 percent of the shipping market with a shipping capacity of 653,996 TEU. Recently, Yang Ming announced the launch of two more 14,000 TEU box-ships alongside plans to deploy 10, 2,800 TEU container vessels coupled with 14 chartered-in 11,000 TEU containerships, all by 2020-22.

Hyundai M.M.

When Maersk CEO Søren Skou called for an end to shipping company government subsidies, many carriers, namely Cosco Shipping (Chinese state-run) and Hyundai M.M. remained hush-hush. China and South Korea are keen on maintaining a competitive advantage over the likes of Maersk and Mediterranean Shg. They are right there, but to keep the momentum many advocates of financial benefits and subsidies in China and South Korea see these as mandatory measures to keep the competition lively. Hyundai M.M. joined the G6, the world’s largest shipping alliance, and now counts on 1.9 percent of the market. Not a lot, but still in the Top 10 and climbing. South Korea as a nation wants to see that percentage grow.

PIL (Pacific Int. Line)

Rounding out the Top 10 is PIL, a Singapore-based company founded by Chang Yun Chung, a Chinese entrepreneur worth approximately $2.2 billion. When Chung first made a splash, it was back in 1967 with PIL commandeering just two, second-hand ships. Counting on more than 150 vessels currently, Chang handed over power to his son, Teo Siong Seng, last year. In 2017, PIL entered into a historic partnership with COSCO, which will enable both to share vessels during peak demand throughout the year. PIL hopes this will provide some leverage to move up the ranks into the No. 5 position by 2030.

An ever-evolving list, these maritime companies are responsible for the bulk of delivery over sea. It is nice to see the variety (nationalities) and cooperation between all ten.   

A 5-step guide to managing cyber threats in the supply chain

When Danish shipping giant A.P. Moller-Maersk was attacked by the NotPetya malware in 2017, access to its electronic booking systems was blocked and ultimately forced a 10-day overhaul of its entire IT infrastructure.

The malicious attack still remains one of the largest disruptions to affect the global shipping industry to date. As a result of lost bookings and terminal downtime, Maersk incurred a massive US$300 million (€264 million) loss.

With the increasing sophistication of cyber threats, companies worldwide have to brace themselves for a new reality where supply chain disruptions are no longer restricted to those of a physical form. Cyber-attacks have the potential to disrupt or, at its worst, cripple the logistics and supply chain operations of an entire business across different geographies.

Instead of adopting a reactive approach to cyber security, companies should actively prevent and manage such cyber risks by devising a response plan with the following five steps.

Identify third-party risks

To successfully thwart future cyber-attacks, companies have to first determine which vendors or third-party entities have access to their firewall and could have the largest impact to the organization in a worst-case scenario.

When selecting possible vendors to work with, it is best to consider the amount of sensitive data that the vendor is handling, such as personally identifiable data, protected health information or financial transactions. With this knowledge, suitable mitigation measures must then be introduced to safeguard the sensitive data.

Monitor the cyber threat environment

As cyber threats are continuously evolving and news reports of a cyber-incident become known, it is a continuous effort to assess and understand events impacting the vendors or third-party entities that your organization works with.

The ability to persistently monitor one’s supply chain and the cyber threat environment will be the best determinant in responding adequately to a cyber-incident.

For instance, a year on from the cyber-attack on Maersk, Chinese state-owned shipping conglomerate COSCO Group managed to contain the damage and limit the length of disruption when its shipping operations in the Americas suffered a ransomware attack.
Though its shipping operations in the Americas came to a momentary standstill, the company’s swift response efforts and preemptive network segmentation prevented the escalation of the attack, allowing regular operations to resume within a week without significant damage.

Assess potential impact

Organizations should possess the capability to gauge the extent of the potential impact a cyber-attack can have on its business operations.

Knowing the nature of each cyber-attack can better equip companies by facilitating understanding, communication and coordination along its supply chain.

Types of cyber attacks

·Data breach: Release of secure information to an untrusted environment, including trade data, schematics, manufacturing systems, shipping data, and other confidential company information
·Ransomware: A form of malware which encrypts a user or end system, rendering all data within inaccessible, and demanding the payment of ransom to decrypt
·Denial of service: A cyber-attack performed by many actors to render a firm’s website or system unavailable to users
·Vulnerability: The discovery of a weakness, known or unknown, which may be exploited by a threat actor to perform unauthorized actions on a system
·Phishing: A fraudulent attempt to obtain security credentials from entry to executive levels for malicious purposes

Conducting a risk assessment on the areas of vulnerability from multiple angles will help companies measure the potential risk and threat of a sudden attack on its supply chain.

Develop risk scenarios and emergency protocols

Without emergency protocols established or adhered to in the event of a cyber-attack, it will likely cause confusion that leads to disruption in the supply chain. Companies need to train its employees on potential threat scenarios and develop corresponding response plans to tackle different situations.

Often, these response processes might involve the use of advanced technology and human intelligence analysis. Having established the protocols and trained employees on their respective emergency response roles, the company will then be well-prepared to implement the appropriate measures to mitigate the potential damage inflicted by a cyber-attack.

Communicate relevant actions to stakeholders

When a threat has been identified, it is imperative to investigate the matter internally and cascade information in a timely manner within the organization before alerting the relevant authorities. Once more details emerge and the nature of the threat is confirmed, organizations should pro-actively inform all stakeholders who have been affected, while activating the emergency response teams to rectify the issue.

With the threat of cyber-attacks looming large, companies need to take control and ready themselves with a proper response plan and top-notch cyber security practices to protect their supply chain.

Shehrina spearheads the supply chain risk monitoring capabilities for Resilience360. Resilience360 offers end-to-end supply chain risk management, alerting customers about supply chain incidents globally and risks to their global supply chain in almost real time. The platform helps companies handle an ever-changing world by assessing the impact of natural disasters, changing regulatory environments, and other supply chain risks. With Resilience360, businesses can visualize their supply chains end-to-end, use machine learning capabilities to detect early warnings of incidents that can disrupt their supply chain and it will allow customers to preemptively respond and minimize business interruption.

This article was originally published on DHL’s Logistics of Things. Read more on how logistics impacts business, builds lasting connections and drives innovation.

Transport Optimizations Increased with ZIM & Avantida Partnership

Leading shipping liner, ZIM confirmed moving forward in a partnership with Avantida in an effort to offer street turn services in the United States, placing them as the second provider of such services after Maersk.
“We are quickly gaining traction in the US. The partnerships with Maersk and now ZIM reflect the market’s eagerness to embrace the Avantida platform,” said Luc De Clerck, CEO, Avantida. “We hope to soon offer the transport community in the US a central hub for requesting optimizations to all major shipping lines.
Through the Avantida platform, successful coordination of empty container and methods of reuse for import containers for export booking are enabled. Additionally, it’s responsible for the facilitation of over 2,000 transactions per day and welcomed 130 transport and logistics companies since its initial launch.
“We have a successful partnership with Avantida in Europe, and are sure the platform will provide great opportunities to the transporters in the US who are seeking to optimize their container transport planning, while reducing their carbon footprint.” said Gil Lehman, ZIM US VP Logistics.
“The cooperation is part of ZIM’s ongoing effort to introduce new advanced platforms for the benefit of our vendors and customers”, added Ronen Meroz, ZIM Global Intermodal Manager.
The platform is currently deployed in  Belgium, The Netherlands, Germany, Austria, France, Spain, Italy, Portugal, Poland, Lithuania, Scandinavia, Switzerland, the UK, Mexico, the United States and Canada.
Source: BSY Associates

Automation Changing the Pace for Shipping Operations

Recently, Avantida announced Maersk’s implementation offering Container Triangulation for the Canadian and U.S. platforms, enabling communication between dispatchers and planners almost instantly. The process of automation will take place on Avantida’s platform, providing an opportunity for the company to penetrate the market regions.

“Both shipping lines and transporters continue to look for agile, cost-saving tools that can optimize their planning, and our platform has a proven track record of improving efficiency,” said Luc De Clerck, CEO, Avantida. “The platform has changed the way shipping lines in Europe are doing business, and after our launch in Mexico, it was a natural next step to introduce Avantida to the United States and Canada.”

Another example of how digitization is changing the pace of the market expansion is seen in the recent announcement from the digital freight forwarder, Twill. The company confirmed efforts to expand its 19-country network to the Nordic regions through operations in Denmark and Sweden, where they are being welcomed with open arms primarily because of the digital solutions platform providing customers increased visibility into each step of the process. More importantly, Twill’s online platform is applauded for the ability to co-create with its customer base. This unique feature is what sets the company apart, creating a hefty competitive advantage.

“The world is already becoming more and more digital around us, and with Twill we are challenging the fundamentals and changing perceptions in the freight forwarding industry,” says Ricco Poulsen, chief operating officer for Nordics and Eastern Europe at Damco said. “We want to be the market leader in digital solutions and our investment in this area will bring significant benefits to our small and medium customers, old and new. There are a number of ways in which Twill will continue to develop and support customers over the coming months, and we look forward to playing our part in that.”

Before understanding the impact that digitization solutions bring to the market, company leaders must first understand the core of digitization is rooted in customer demands. Without fully understanding what the customer’s needs and demands are, it can be a challenge selecting which tech solution will meet both customer and company needs, all while creating a competitive advantage and staying ahead of compliance.

Maersk: Improved Cargo Deliveries for 2019

A.P. Moller-Maersk makes its latest move through improvements related to the Asia-Europe network, specifically improving efforts for cargo delivery and scheduling between the regions, according to the latest company news release.

“To meet our customer’s increasing need for reliable cargo delivery, we have reviewed our service network and identified additional time to recover from the potential delays we continue to face from bad weather and other external factors. I am confident that these service changes will improve our overall schedule reliability, and I look forward to service our customers with this upgraded product,” says Johan Sigsgaard, Head of Europe Trade, A.P. Moller – Maersk.

The change is another example of how the company stays one step ahead of the customer’s needs as the industry approaches a new year with inevitable challenges on the horizon.

The company revealed that a total of six additional vessels will be added across the ten service strings within the network in an effort to support the company’s scheduling changes. Additionally, a list of service maps and westbound shipping deployment start dates were revealed. Service changes are anticipated to kick-off early 2019.

To read more about the changes and deployment schedule, visit: Maersk.

Source: Maersk 

World’s Largest Containership Launched in Korea

Los Angeles, CA – The world’s largest containership – the CSCL Globe – has been launched in South Korea for China Shipping Container Lines (CSCL) at the Hyundai Heavy Industries Co. Ltd. shipyard in South Korea.

The massive ship is the first of five 19,000 TEU (20-foot-equivalent unit) containerships built for the Chinese shipping company and takes the title of world’s largest containership from Maersk Line’s 18,000 TEU ‘Triple E Class’ vessels.

Measuring 1,300 feet in length and 183,800 tons, the CSCL Globe is as large as four football fields. She will be deployed on the Asia-Europe trade loop after being handed over to the owner later this month, the company said.

The ship is the first of an upcoming fleet of four such $175 million vessels that the company plans to launch by the end of 2015.

The CSCL Globe has a top speed of 16 knots and is powered by a 77,200 bhp electronically-controlled main engine that incorporates an electronically-controlled throttle.

The new throttle system takes the ship’s relative speed and the prevailing ocean conditions into account to offer increased fuel efficiency rates.

As a result, the containership will burn 20 percent less fuel per TEU in comparison with the 10,000 TEU containerships, the builder said.

The new ship displaces the existing container capacity record holder, the MV Maersk Maersk, which has a capacity of 18,000 TEU (twenty-foot equivalent unit) shipping containers.

The Maersk ship beat out the older, 16,020 TEU MV CMA CMG for the title in 2013.

Maersk to Raise Tariffs on Inland US Imports, Exports

Madison, NJ – Container shipping giant Maersk has said it will raise the tariff on US inland imports and exports due to intermodal “operational stress.”

In its notification letter to customers, the shipping giant cites chronic trucker shortages and surging cargo volumes that are causing delays at the rail and terminal levels.

Denmark-headquartered Maersk said it would raise its US inland import and export tariffs effective September 1, 2014, for all store door and container yard (CY) export shipments by truck, the tariff amount will increase by $25 across all equipment types.

For all store door and container yard import shipments, the company said, the tariff on 20’ and 40’STD equipment tariff rate will increase by $25; on 40’ HDRY by 20’ REEF and 40’ HREF  by $30; and on 45’  HDRY  by $35.

Maersk said it forecasts that intermodal costs in the industry “will continue to rise as the year progresses.”

08/14/2014

FLASH: China Turns Thumbs Down on P3 Alliance

Los Angeles, CA – China has denied approval of the proposed P3 shipping alliance that would have combined the operations of Denmark’s Maersk Line, MSC of Switzerland and France-based CMA CGM into the largest ocean carrier consortium in the world.

The surprise move was announced this morning by China’s Ministry of Commerce, which released a statement saying that it had decided to prohibit the alliance after conducting “an anti-trust assessment.”

Had it been given the go-ahead, the Ministry said, the alliance would “have a far-reaching impact on the global shipping industry and cause a high level of concern in all sectors.”

It added that the alliance would increase the parties’ “combined capacity in container shipping on Asia-Europe routes” and give them a “substantial increase in market concentration.”

Regulatory agencies in both the US and the European Union green-lighted the proposed P3 earlier this year after stating that they wouldn’t pursue any antitrust issues regarding the deal.

The largest of the three carriers, Maersk, responded to the decision in a joint statement saying that “the partners have agreed to stop the preparatory work on the P3 Network… the P3 Network as initially planned will not come into existence.”

The consortium would have created a combined fleet of 250 ships operating on a global front that would handle an estimated 43 percent of Asia-to-Europe container shipping, 41 percent of the trans-Atlantic box trade, and almost a full quarter of the container volume in the transpacific market.

The alliance had aimed at allowing the three giant carriers to cut billions in annual costs by sharing ocean terminals, space on each others vessels, and exploiting each container carrier’s geographic strengths to move cargo faster and more economically.

06/17/2014

One Hurdle Left for the Giant P3 Shipping Alliance

Los Angeles, CA – Creation of the giant P3 shipping alliance now rests with Chinese regulators, who, analysts say, are on the verge of sanctioning what would be the most powerful ocean carrier consortium in the world.

Approval by Beijing is the final hurdle standing in the way of the proposed P3 to begin operations as early as this fall.

The P3 would be made up of the three largest container carriers in the world – Denmark’s Maersk Line, MSC of Switzerland and France-based CMA CGM.

The three-line consortium would create a combined fleet of 250 ships operating on a global front that would handle an estimated 43 percent of Asia-to-Europe container shipping, 41 percent of the trans-Atlantic box trade, and almost a full quarter of the container volume in the transpacific market.

The alliance will allow the three giant carriers to cut billions in annual costs by sharing ocean terminals, space on each other’s vessels, and exploiting each container carrier’s geographic strengths to move cargo faster and more economically.

Regulatory agencies in both the US and the European Union have given their approval to the proposed alliance after stating that they wouldn’t pursue any antitrust issues regarding the deal.

The Chinese are expected to announce their approval of the alliance by the end of this month.

06/13/2014