Despite Worries, Panelists See Bright Future for Container Shipping

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From the difficulties of recruiting young people for maritime industry jobs to the impact low-sulfur fuel requirements will have on shipping costs, leaders in the container shipping business tackled an array of questions during a panel discussion at the South Carolina International Trade Conference last month in downtown Charleston.

Panelists included: Allen Clifford, executive vice president of MSC Mediterranean Shipping Co.; Klaus Schnede, manager for North American marine operations at Eastman Chemical Co.; Wolfgang Freese, president of Hapag-Llloyd Americas; Marlon Jones, manager for international distribution at International Paper; and Mario Giannobile, senior director of North American sales at Maersk Line. The discussion was moderated by Mark Szakonyi, an editor at the Journal of Commerce.

The remarks have been edited and condensed for clarity. Among the discussion highlights:

Q: How is U.S. trade shaping up in 2018?

Giannobile: If you look at the overall global trade, we are seeing growth in the neighborhood of 2 percent to 4 percent. If you look at North America, particularly in Canada, we’re seeing growth upward of 10 percent in both directions. There’s continued growth in Europe. And most recently, we’ve seen reports of exports from Europe back to Asia improving. So, overall, I can speak pretty comfortably that global trade — which is a bellwether for the economy — has continued to improve.

Q: We’ve heard talk about new orders for larger ships and concerns about overcapacity. Is there overcapacity, or is the industry starting to turn the corner in terms of growing volume?

Clifford: In New York, we have a saying that you have to be in it to win it, and so it is with the ocean carriers as well. It’s true that MSC, along with other carriers, have announced new builds. But before we all jump off a cliff, I want to remind you that when an ocean carrier builds new, they also put to rest some of their older tonnage — the tonnage that is shorter and older and smaller. It’s not just a matter of adding and adding, because that would be illogical. Yet, the fact is world growth continues. It’s moving ahead. Trade continues and that’s a healthy thing for the world.

Q: There has been a shift in cargo share from the West Coast to the East Coast and Gulf, particularly in Asian imports. Have we hit where we’re going to be in share or do you see the East Coast gaining more share? 

Freese: I would say there might be a little more than they have currently, but I don’t believe there is anything critical to drive more cargo to the East Coast. The alliances have been in place since April 1 and fleet deployment has been done.

Q: How are carriers preparing for the new low-sulfur rules that will impose a global cap on sulfur emissions, reducing pollution but increasing fuel costs?

Schnede: We’re very worried about that. It could be a $50 billion to $60 billion issue around the globe, and the range is because no one really knows what the cost is going to be once low-sulfur fuel is introduced in 2020. We’re hearing that the International Maritime Organization will not give in and delay this implementation, which is very worrisome. Alternatives such as scrubbers are supposedly not a solution. Yes, we are very worried about the explosion of costs that exporters and importers are going to be hit with because of the implementation of the new rules.

Giannobile: We at Maersk Line have taken the position that scrubbers are not the answer, first of all because they are extremely costly. They require a lot of maintenance, which adds additional costs. And they require skilled labor to be aboard the vessel should there be an issue. So we have taken the position to use alternative fuels and press the industry for alternative fuels to meet the requirement. If you look at what scrubbers will do, the industry would still be using bad fuel and trying to make it clean versus making the change for cleaner fuels.

Q: What kind of information are cargo owners needing from their supply chain partners, particularly with carriers, and are you getting that information?

Jones: It’s simple — I want to know where my product is at all times and, no, I’m not getting that. I have subscriptions to three different software companies and all they’re doing is taking bad data and scrubbing it and trying to put out good data. It’s not reliable, but I still have to have it. I cannot afford for my customer to know that their product is not arriving on time before I know. It’s not good, and we need to continue to try to get better.

Q: The ocean carrier industry is an aging industry. How do you recruit younger people to the industry?

Giannobile: One of the programs we’re very proud of is called MLGP (Maersk Line Graduate Program), where we go out to the colleges and look at young men and women who are interested in logistics or economics or international business and we take the best of the best and introduce them to Maersk Line. After one year in the program, they get an opportunity to work overseas to learn different aspects of the business. They’re moving from desk to desk until they become an expert in supply chain and logistics and they’re given an opportunity to find a place within the organization.

Jones: I’ve had a difficult time finding staff, but we do recruit at some of the best logistics schools in the U.S. I talk to a lot of young students and every opportunity I get I tell them, this is an awesome field. I have not had a boring day in a long time. I tell them I wake up every day and it’s always something different. If that drives you, this is the field you need to be in. I can’t imagine myself being in a boring job.

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Source: The Post and Courier

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