GENEVA : Mediterranean Shipping Company (MSC), a global leader in transportation and logistics, is continuing to invest in ships and services to help clients tackle global supply chain disruption, said CEO Soren Toft.
MSC has increased its ocean fleet capacity by 22% since 2019, as well as adding 11 new mainline trade services and expanding its rail offering, in response to a crisis that has propelled logistics to the top of the boardroom agenda in many international companies.
“What’s most important for our customer is that they don’t miss their sales, that they have product on the shelf and less so about what should the cost be of container from one continent to another,” Soren said, speaking in a keynote session at the Financial Times digital Global Trade Secrets Summit on 11 November. “Logistics is featuring more prominently on the executive floors of our customers.”
Origins of the “Crunch”
Soren traced the current supply chain disruption to the demand slump at the start of the COVID-19 pandemic and the subsequent sudden rebound in Trans-pacific trade. He pointed out that back in the second half of 2020, MSC saw approximately the same demand from clients as the company would normally receive in a whole year and highlighted the surge in U.S. consumer goods imports as a key contributing factor to the current supply chain malaise.
Presenting a selection of MSC’s fleet statistics, Soren showed the audience of senior representatives of organisations from business, finance and public policy how the COVID “crunch” has created a huge strain on container carriers and impacted their operations.
For example, MSC has typically injected an extra ship for each round-trip service to accommodate not only the increase in demand for trade in goods, but the inefficiency of carrying cargo between congested ports.
Due to the blockages, MSC vessels are tending to queue for longer outside ports before they can access a berth. In fact, the average waiting time for a port call has increased by 59% in the first nine months of this year, compared with the same period in 2019, and the MSC fleet has lost an additional 5,565 days stuck at anchor in the same period.
Investing in port infrastructure, including through terminal automation, and improving landside networks is key to resolving supply chain difficulties in the U.S., Soren concluded, as carriers cannot simply keep sending more ships to the same ports. This is especially true when trucks are arriving infrequently to pick up the boxes from the terminal.
“LA-Long Beach has been overwhelmed by the current volume,” he said. “We need to have more picks-ups of containers from the terminals, we need to have more people doing the trucking and we need to have more workers in the warehouses. That will gradually resolve the issue.”
Soren added that while the initial surge in goods in 2020 was driven by the American consumer, and while Long Beach is one of the key choke points today, the supply chain “crunch” is a truly worldwide phenomenon, spanning not only the U.S., but also Europe, Asia and beyond. With global trade forecasted to grow 5.9 percent this year and 4.9 percent in 2022, the “crunch” is expected to continue for a while yet.
“We believe demand will continue into next year, so we will most likely have to continue to deal with these supply chain issues in some shape or form into the foreseeable future,” he said. “We are in the midst of an unprecedented supply chain crunch not seen for a long time.”