MSC to discuss world shipping trends & decarbonisation at the economist global trade week

15 Jun 2021

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Global trade was completely reshaped in the past year and a half because of the global health crisis that sparked systematic problems driving everyone to re-think supply chain models and agility of service networks.

As a major sponsor of The Economist’s Global Trade Virtual Week, MSC announces two speakers taking part in the discussion on sustainable trade, and the role of container shipping and logistics as a positive force in shaping the post-pandemic global trade.

The free online event takes place from 28 June to 2 July 2021 seeking to advance global trade dialogue to shape the post-pandemic recovery.

MSC Speakers

On the final day, 2 July at 4:00-4:20 PM CEST MSC CEO Soren Toft will join the Economist’s Senior Trade & Globalisation Editor in a closing keynote interview on what sustainable, smart, and secure future looks like for shipping. The agenda covers topics including supply chain resilience, globalisation, digital trade, and COVID-19 recovery

In this session, Soren discusses the lessons learned from the past 1.5 years and how the industry will be evolving as a result of huge investments into improving efficiency, better deployment of technology, and cross-sector collaboration to accelerate decarbonisation.

The day before, on 1 July at 5:45-6:15 PM CEST, Bud Darr, EVP Maritime Policy & Government Affairs, MSC Group joins a panel to discuss how partnerships and collaboration are key to decarbonising shipping. Panellists will explore how the shipping industry, which moves around 90% of world trade, is prepared to decarbonise and help create a carbon-neutral economy by 2050.

Global trade driving the post-pandemic recovery

This virtual event organised by The Economist will host policymakers, government representatives, trade experts, analysts, economists, and global business leaders from different sectors including logistics, manufacturing, and financing.

During these five days, the agenda covers a variety of topics including supply chain resilience, globalisation, digital trade, and COVID-19 recovery.

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Backlogged ports among symptoms of global supply chain disruption

Backlogged ports, a shortage of shipping containers and not enough workers are among the factors contributing to supply chain disruptions that have led to shortages of various goods and are likely to impact availability of merchandise, during the upcoming holiday season. Demand is growing rapidly as the impacts of the COVID-19 global pandemic have diminished. However, lingering consequences of the pandemic are continuing to impact the container shipping market. With each element in the system tightly intertwined, any changes tend to ripple with additional repercussions. Slow circulatory movement of containers A direct upshot of the COVID-19 pandemic was to slow the circulatory movement of containers globally. To increase productivity and save time, some vessels began making their return journeys empty, in effect leaving more empty containers at the delivery destination and fewer at the source of shipments. The varied timing of the pandemic in Asia and the West compounded the problem At one point, Asian containers could not be sent back to Asia, because of COVID-19 restrictions in place. The varied timing of the pandemic in Asia and the West compounded the problem. With empty containers stacking up in the West and a shortage in the East, slower circulation of containers and higher demand have led to sharp increases in costs. Millions of TEU dry container units added A lack of new equipment is not the problem. Last year, the industry added about 2.8 million twenty-foot equivalent (TEU) units of dry containers, in line with the 10-year average. Congestion at ports has been going on for months and still continues. Recently, in the San Pedro Bay region, near the Port of Long Beach, in California, there were 144 ships, including 85 ships that were waiting to unload. In Savannah, Georgia, more than 20 container ships were waiting to dock. Ports in the US states of New Jersey, New York and Texas have also seen record backlogs. Majority of influential global ports face backlogs According to one report, 77% of the most influential ports in the world reported above-average wait times this year. The turn-around time for a container in ports has nearly doubled in 2021, in comparison to 2019. A worker shortage at the ports is aggravating the problem and container ships now carry about 30% more goods, which require more labour to unload. Ports are also doing the additional work with fewer people. There is also reduced labour productivity at warehouses and marine terminals. Investment in workforce training to counter bottlenecks Some port bosses expect the bottlenecks to last through the summer of 2022. To address the problem, some ports are investing in workforce training and scheduling night-time appointments to pick up goods. Although a lot of attention is focused on the ports, they are just one element in the troubled supply chain. Even if the ports could increase their capacity, downstream processes would also have to increase their labour force, to accommodate the higher volume. Difficult to absorb impact of global supply chain disruptions In the best of times, the global supply chain operates like a well-oiled machine In the best of times, the global supply chain operates like a well-oiled machine, despite its complexity and the inter-relatedness of various stakeholders. However, the sheer size of the system makes it difficult to absorb the impact of any disruptions. Turning the system around takes time, and a burgeoning global demand for goods, in the aftermath of a global pandemic, makes recovery even more difficult. The Biden Administration in the U.S. has established a Supply Chain Disruptions Task Force, to monitor and address short-term supply issues. This task force is convening meetings of stakeholders in industries with urgent supply-chain problems, such as construction and semiconductors, to identify the immediate bottlenecks, as well as potential solutions. Role of global supply chain more critical now There have been supply chain disruption and staff shortages in several countries, including the United Kingdom (UK), Germany and New Zealand, according to business surveys. As the economy recovered and demand increased, businesses have not yet been able to bring inventories fully back to pre-pandemic levels, causing inventory-to-sales ratios to fall. The role of the global supply chain has never been more critical.

How the maritime industry is working to lower carbon emissions

The maritime industry is not covered by the Paris climate agreement, which seeks to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels. However, carbon emissions from maritime activities account for 2 to 3% of total global warming potential (GWP) worldwide, and the share is likely to increase in coming years, approaching 17% of CO2 emissions by 2050. The International Maritime Organisation (IMO) and its Marine Environment Protection Committee (MEPC) is tasked with regulating carbon usage in the maritime industry and has established aggressive goals – both near-term and long-term – to ensure carbon emissions from the maritime market decrease by at least 40% in 2030 (compared to 2008 levels), and by at least 50% by 2050. MEPC has new emissions reduction and efficiency requirements taking effect in 2023. Measures to reduce carbon emissions Binding across its 170 member states, IMO has adopted mandatory measures to reduce emissions of greenhouse gases under its pollution prevention treaty (MARPOL). The Energy Efficiency Design Index (EEDI) is mandatory for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) is required for all ships. The Sustainable Shipping Initiative (SSI) is a multi-stakeholder initiative to improve the sustainability of the shipping industry in terms of social, environmental, and economic impacts. Founded in September 2010, SSI has 15 members spanning the shipping value chain, from charterers, shipowners and operators, to shipyards, banks, classification societies, and technology companies. Poseidon Principles Poseidon Principles are consistent with efforts of the IMO to reduce shipping’s total annual greenhouse gas emissions The Poseidon Principles establish a framework for banks and financial institutions to assess and disclose the climate alignment of ships to provide guidance and promote responsible environmental stewardship. The Poseidon Principles, signed by 20 financial institutions representing over $150 billion in loans to the shipping industry, are consistent with efforts of the IMO, seeking to reduce shipping’s total annual greenhouse gas emissions by at least half by 2050. Decarbonisation goals Some shipping companies are already setting individual decarbonisation goals beyond the IMO’s target, driven by their customers’ desire to reduce their global carbon footprint. The intensity of emissions has decreased somewhat in recent years because of larger ship sizes and slower traveling speeds. Interim solutions to lower carbon emissions include the use of liquefied natural gas (LNG) as a shipping fuel, which produces less carbon than the oil commonly used. LNG can also be less expensive but is not seen as a permanent solution because it still emits carbon. FuelEU Maritime initiative Global maritime technology networks promote the adoption of low-carbon technologies The European Commission has launched the FuelEU Maritime initiative, seeking to increase the use of sustainable alternative fuels in European shipping and ports. The European Union also seeks to include the shipping industry in a mandatory cap-and-trade carbon market, a so-called emissions trading scheme, as early as 2022. Also, the global maritime technology network (GMN), funded by the European Union, is a network of Maritime Technology Cooperation Centres (MTCCs) in Africa, Asia, the Caribbean, Latin America, and the Pacific. They seek to develop national maritime energy-efficiency policies, promote the adoption of low-carbon technologies and establish voluntary pilot data collection and reporting. Carbon Intensity Indicator (CII) ratings Scope ESG Analysis, a German credit rating, and analysis firm has launched a database to display Carbon Intensity Indicator (CII) ratings for the world’s commercial maritime fleet. Including 70,000 vessels, the Ship Review database provides transparency into each ship’s environmental, sustainability, and reliability/safety performance. The CII rating system seeks to assist the maritime industry in reducing greenhouse gas emissions, measuring a ship’s operational efficiency in grams of CO2 emitted per deadweight tonnage and nautical miles travelled. Based on 2020 data, more than a third of the world’s fleet could fail to meet upcoming restrictions. GreenVoyage2050 Project The International Maritime Organisation is executing the GreenVoyage2050 Project through the Project Coordination Unit (PCU). The project seeks to help developing countries in their efforts to reduce greenhouse gas (GHG) emissions from ships. Longer-term fixes to lower greenhouse gases include a need for zero-carbon fuels and technologies Phase one of the project, signed with Norway in 2019, is currently underway. Phase one of the GreenVoyage2050 Project is scheduled to run until May 2022. Longer-term fixes to lower greenhouse gases include a need for zero-carbon fuels and technologies; however, they are not currently available at the size, scale, or price the industry needs for broad adoption. New fuels will need to be developed, along with new propulsion systems, upgraded vessels, and a new global refueling network. Need for zero-emissions technologies New zero-emissions fuels and technologies on the horizon include batteries, sustainable biofuels, green or blue hydrogen, and their derivatives such as ammonia and methanol. Blue hydrogen is produced from natural gas by splitting molecules into hydrogen and carbon dioxide and capturing and storing the CO2. Green hydrogen is produced by splitting water through electrolysis and powering the process using renewable electricity sources such as wind and solar. However, zero-carbon technologies are far more expensive than current bunker fuel oil. A wide variety of global stakeholders are involved in trying to lower the impact of maritime’s carbon emissions on climate change. The maritime industry’s 2 to 3% impact may seem small, but the share could increase over time unless the industry continues to take action.

Cruise industry receives lifeline from Finnish pioneers in safety innovation race

The cruise industry has received a vital lifeline in its bid to safely set sail once again. Several pioneering Finnish businesses and organisations have developed new, innovative safety approaches for the sector to adopt, in response to new post-pandemic measures. These new initiatives and research projects are set to bring the industry back from the brink and ensure a safer and successful cruise experience for all. Undertaking health and safety measures Expectations surrounding cruises today have changed beyond all recognition in the wake of the COVID-19 pandemic. Whilst the safety and wellbeing of passengers and staff has always been a top priority for the industry, its recovery depends on taking health and safety measures to a new level, to drive stability and sustainability in the challenging years ahead. Since the onset of the COVID pandemic, Finnish research organisations and companies have led the charge in responding to the industry’s call for new solutions to support its resurgence. With viable options showing what is possible, the future of the industry looks bright and secure. Healthy Travel project Researchers collaborated with cruise companies to find ways of improving health and safety on cruise ships The Healthy Travel project[i] is one such initiative: researchers collaborated with cruise companies, shipyards, and subcontractors to find ways of improving health and safety on cruise ships and in terminal buildings. Researchers in cell biology and industrial management created models to analyse passenger flows on vessels of different sizes and developed processes and procedures to minimize infection risks. To further understand the role of breathing, coughing, and sneezing in spreading COVID-19, researchers from Tampere University, VTT Technology Research Centre of Finland, and the Finnish Institute for Health and Welfare created a robot head [ii] prototype as part of the AIRCO research project. Air purification techniques The initial aim of the robot was to support the design and planning of all kinds of indoor spaces, including ships and terminals, and to measure the effectiveness of masks, ventilation, and air filtration and purification solutions in preventing the spread of viruses. Ensuring indoor air quality (IAQ) is also a crucial factor for minimising infections among passengers and crew. To support the need for better air purification techniques, interior accommodation provider ALMACO partnered with Genano [iii] to provide the marine and offshore industry with advanced air decontamination technology that removes airborne impurities of all sizes, including microbes and the novel coronavirus. Developing solutions for material flow on ships KONE researched with several cruise line companies to develop solutions for people and material flows on ships In addition to air quality, the flow of people and material can have a huge impact on the transmission of airborne viruses. KONE [iv], a global pioneer for marine elevators and escalators, conducted intensive research in partnership with several cruise line companies to develop new solutions for people and material flows on ships while improving health and safety on board and in the terminals. This involved collecting data with sensors installed on ships, timing activities, and conducting interviews with passengers and crew members. In the same vein, an IoT platform from Hypercell[v] uses Bluetooth signal sensors to collect data on people volumes, dwell times, and flows in indoor and outdoor locations. Innovation is key Innovative approaches are the way forward for the industry to get back on its feet, but with so much at stake, these next steps are crucial to get right. Accurate data, insight, and new techniques will play a key role in moving forward, as Timo Pakarinen, managing director for KONE’s marine business explains, “Any changes on cruise ships must be fact-based and commercially viable solutions because the investments required are so large.” Supporting cruise industry recovery “Collaborative research projects such as these, which have been initiated and funded by Business Finland, will continue to produce innovations and technologies to support the recovery and future viability of the cruise industry for many years to come.” “Finland now offers leading technologies and solutions focusing on indoor air quality, passenger flows, safety protocols, and touchless solutions. The insights gained from this vital research are also contributing to the design of new cruise ships,” says Ulla Lainio, Head of Marine & Ports Global Industry Team at Business Finland.

MSC to discuss world shipping trends & decarbonisation at the economist global trade week

MSC Speakers

Global trade driving the post-pandemic recovery

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