Starting as a container and shipping company, Denmark-headquartered AP Moller-Maersk aims to become an integrated logistics group. To this end, it has expanded its shipping services beyond the sea to land and air, invested on “door-to-door” deliveries and integrated operations through digital platforms.
This development comes as global supply chains, especially maritime ones, are still overloaded due to the COVID-19 pandemic, says an article published on bnamericas news website.
BNamericas Talked About Julian Thomas, A.P. Moller-Maersk’s managing director for the East Coast of South America
BNamericas: What are your perspectives this year for the region, considering the challenging supply chain scenario imposed by COVID-19?
Thomas: We are in a situation that no one has faced before. The global and local effects of the pandemic have been profound and continue to be, despite some improvement in other parts of the world.
In the logistics chain, global trade is heavily dependent on the container. More than 80% of this movement occurs via ship in some part of the international chain.
International trade had already slowed down before the pandemic, and so had investment in new ships. Then came the pandemic, leading to a brutal downturn in global trade, first when China shut down and then the other countries, in a chain reaction. It reached its lowest level in April last year, with container movement volume falling by more than 30%.
BNamericas: The industry was not prepared.
Thomas: The problem is that the supply chain was set for slower growth even before the pandemic. And there was a much faster recovery after it and the chain does not support this growth.
Furthermore, there was also a brutal drop in productivity: lack of manpower at ports, truck drivers, personnel to take the trains. As a result, ships stranded waiting to enter the ports, containers stuck on ships. We are still experiencing this situation of slower flows, causing a cascade effect.
Anything adding to this difficult scenario, such as the blockade of the Suez Canal for a week, further aggravated the situation. It took months to fix this process. More than 100 ships were waiting to enter the channel that week, causing logjams. When it opened, everyone ran to the same ports.
All of this has an impact on the supply of raw materials and the distribution of goods. And the entire logistics industry has done everything to keep the minimally necessary flows for things to work.
BNamericas: Many companies have changed the way they handle their stocks, opting for just-in-time deliveries and using air transport. Maersk is also betting on air freight.
Thomas: We’ve been on a transformational journey for five years – and the digital agenda is part of that – to, rather than just being a shipowner, being an integrated logistics company.
Part of this encompasses offering services beyond just the ocean. Air is one of them. We already have a fleet of aircraft but, more than that, we are entering into a direct service offer for our customers.
BNamericas: How about digital solutions to improve productivity? What’s your focus there?
Thomas: The maritime industry is way behind on the digital agenda. To integrate logistics as we want, it is necessary to digitize, and quickly. There is no integration without it.
Our goal is to make it as easy to make a global logistics operation as it is for the consumer to enter MercadoLibre or Amazon and shop. A few clicks, and that’s it.
But we are far from that. Not just as Maersk, but logistics and container operators as a whole. There is a lack of standardization of processes on the road to digitization, but there is progress. And I would say that we are leading this process.
BNamericas: How is productivity at the region’s ports?
Thomas: Much better. The [Brazilian] Santos Brasil, BTP, Itapuá, Navegantes, Itajaí terminals are examples of ports that have excellent productivity, at an international level, when it comes to ship operations.
Where there are still problems is when you want to leave the port and there are bottlenecks due to the accumulation of volumes at the same time.
What is still lacking is the infrastructure as a whole. In the past, one of the big problems was the customs process. And that part has gotten better. There are great advances on the part of [Brazil’s] IRS to facilitate this process.
Yet, there is still a lot to improve and digitize. The process in Brazil still requires a lot of paper. There is a willingness on the part of the authorities to reduce bureaucracy, but the “gears” still do not work 100%. We see a good measure coming, but at the same time it is accompanied by a new paper process.
We create an electronic document, but that doesn’t necessarily replace paper because paper is still required. A truly paperless world creates for us billions of dollars in savings, fewer people in the process of looking at the document, environmental gains.
BNamericas: Are concessioning terminals to the private sector and the discussions on the privatization of ports important steps to increase productivity?
Thomas: Absolutely. We would not have advanced the way we have without privatization and the development of the private-use terminals. If you look, for example, at Santos Brasil, before being privatized the terminal handled between 10 and 20 containers per hour. Now it handles more than 100.
BNamericas: What has the company been doing to protect itself from cyber and ransomware attacks like those on major global companies that even led to the shutdown of operations?
Thomas: We suffered a very strong attack about five years ago. It shut down the company; we stopped working. We took the system back relatively quickly with tremendous engagement from teams, endpoints, providers and customers.
This is extremely serious for us. Our security systems are strict. And we have a cyber defense team operating 24/7. There are an extraordinary number of daily attempts to hack our systems.
BNamericas: Which stakeholders?
Thomas: Shipowners, many have already joined. Many ports are in, too. Customers, some [are in]. But the game-changer would be authorities. These, by our perception, would have a great interest in systems like this, but the process of adoption is slower. It is in customs’ interest to have everything electronic to facilitate inspection.
BNamericas: Which other emerging technologies are you eyeing?
Thomas: I’d like to go back to something more basic, in fact. A more practical thing that we have been doing is Spot, which is the digitization of the cargo quotation and closing process. This process was, a few years ago, 100% based on paper, email, telephone. A whole world of price quotation.
The customer has shipment security, price security, and we have security that they will show up with the cargo. We still have a lot of last minute cancellations in the logistics chain that leads to so-called overbooking, an inherent addiction to the system.
Then, in supply chain management, we have a series of products, such as NeoNav [an artificial intelligence solution to help companies streamline supply chains, cut costs and better manage inventories].
We have over 6,000 people globally working on IT and digital development. And all business units are engaged in this process.
Summary
- Starting as a container and shipping company, Denmark-headquartered AP Moller-Maersk aims to become an integrated logistics group
- In the logistics chain, global trade is heavily dependent on the container. More than 80% of this movement occurs via ship in some part of the international chain.
- The maritime industry is way behind on the digital agenda. To integrate logistics as we want, it is necessary to digitize, and quickly. There is no integration without it.
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Source: bnamericans.com
