We’re a long way from major markets and up against fierce competition from every other food-producing export country. How does New Zealand continue to be competitive on the world stage? By being at the leading edge of efficiency right through the supply chain, says Maersk Oceania head of reefer sales Tony Mildon. The future on the seas will hold reduced sulphur emissions, zero carbon shipping and increased costs along with new trading technology.
New Zealand is critically dependent upon international shipping for its continued growth and prosperity, notes Mildon.
“Given the tough economic environment we operate in, there are no quick and easy solutions – all parties within the shipping and logistics ecosystem must continue to work closely together and pull in the same direction to ensure we future-proof the development of shipping in New Zealand,” he says.
Looking ahead, Maersk sees some strong opportunities for companies willing to participate more in the development of the end-to-end supply chain.
“Today, with the multiple contact points and the inherent complexities of global shipping, there is significant waste and inefficiencies which ultimately lead to delays and high costs. Finding sustainable solutions to address these issues will bring the shipping industry into the modern way of managing business transactions, by offering enhanced simplicity and transparency.”
In working to build customer-based solutions, Mildon says Maersk will work across industry parties and invest in opportunities that drive efficiencies in the supply chain, both in New Zealand and in global markets.
Mildon gives the example of a recent launch by Maersk – its new coldstore facility in St. Petersburg to address the needs of a high-demand Russian market. “The three-chamber warehouse will offer specialised solutions extending the shelf-life of perishable goods. The new cold store will enable Maersk to offer end-to-end solutions to Russian customers and thus to better meet their specific needs,” he says.
New Zealand’s meat exporters can expect to see a number of changes and innovations around shipping in the next few years.
Seismic change for global shipping in 2020
New International Maritime Organisation (IMO) regulations coming in on 1 January 2020 will also entail a seismic change for global shipping. On 1 January 2020, the new regulations (IMO2020) will require virtually all vessels to limit their sulphur emissions to less than 0.5 percent, rather than today’s cap of 3.5 percent. This will reduce shipping’s sulphur emissions by more than 80 percent. Maersk fully supports this regulation, which will be a significant benefit to the environment and to human health, particularly for populations living close to ports and coasts. However, low sulphur fuels are significantly more expensive.
External sources estimate additional cost for the global container shipping industry could be up to US$15 billion. For Maersk alone, the cost of compliance could exceed US$2 billion in extra fuel costs a year, says Mildon.
“The shipping industry cannot absorb this increased cost from the new regulation; it has to be passed on to the end-users of the items shipped in our containers,” he says, adding customers should prepare to plan and budget for shipping cost increases.
Zero carbon shipping focus
Carrying around 80 percent of global trade, the shipping industry is vital to finding solutions for climate change issues. This means zero carbon shipping is another major focus for Maersk. To date, Maersk’s relative CO2 emissions have been reduced by 46 percent (from a baseline in 2007), about nine percent more than the industry average.
As world trade and thereby shipping volumes, will continue to grow, efficiency improvements on the current fossil-based technology can only keep shipping emissions at current levels but not reduce them significantly or eliminate them.
In December 2018, the Executive Board of A.P. Möller-Maersk approved a new company ambition for climate change: to have net-zero CO2 emissions from its own operations by 2050. The only possible way to achieve the so-much-needed decarbonisation in the shipping industry is by fully transforming to new carbon neutral fuels and supply chains, it determined. Moller-Maersk’s target covers the so-called scope one emissions – the emissions coming from its own financially-controlled operations. They cover 65 percent of the shipper’s total supply chain emissions and, so, the Board felt was the right place to start for the company.
“More than 98 percent of these emissions comes from propelling our vessels,” explains Mildon.
To keep global warming well below two degrees all sectors need to decarbonise around 2050.
“In the shipping industry, it will not be possible to reach the 2050 target, if we don’t start developing new technology now. Given the 20-25-year-lifetime of a container vessel, the first dedicated zero-carbon vessel must be introduced by 2030, followed by a slow ramping up, allowing the maturing of technology and supply chain,” he says.
“Decarbonisation changes the game completely. Massive innovative solutions and fuel transformation must be found and implemented in the next 5-10 years. Research and development will be the key cornerstone of achieving zero reductions.
“Throughout that journey, all parties involved, cargo owners, regulators, investors, researchers will need to collaborate, incentivise and develop innovative solutions that help the industry to effectively and timely tackle the number one sustainability issue in the world.”
Tradelens: new digital trading technology from Maersk and IBM
When it comes to digital transformation the world is moving fast and everybody, including meat exporters, will have to move with it. For Maersk, the development of smart assets and digital supply chain integration holds a high priority.
“We firmly believe that leveraging digital innovation across our brands will present many opportunities to deliver a better customer experience. In terms of the physical movement of goods, in terms of the customer service experience, and in terms of the simplicity of the end-to-end solutions we offer,” says Mildon.
Many of the processes for transporting and trading goods are costly, in part, due to manual and paper-based systems. Replacing these peer-to-peer and often unreliable information exchanges, a new platform enables participants to digitally connect, share information and collaborate across the shipping supply chain ecosystem.
Maersk and IBM are jointly developing TradeLens, an end-to-end global digital trading network based on block-chain technology. TradeLens is an open and neutral industry platform, supported by major players across the global shipping industry. The platform has been launched to help modernise the world’s supply chain ecosystems.
Mildon says TradeLens’ presence has developed strongly in the Asia-Pacific region over the last six months.
“Shippers will ultimately benefit from a wider ecosystem and an expanded network of firms sharing data,” he says, adding benefits could potentially come from upstream visibility (even outside of their controlled supply chain), better document management, customs clearance processing all with a goal of ensuring products are to consumers at the right time, in the right place.
“Linking a regional ecosystem shows immediate benefits to those companies that are linked and share trusted blockchain underpinned information and will be complemented further by the global ecosystem TradeLens continues to build for global trade,” he says.