Toft: We are consuming too much fuel and have too many ships in the networks

The container shipping industry has been faced with an unprecedented congestion crunch over the past year and a half, driven by COVID-19 related labour shortages, as well as handling capacity limits resulting in major disruption across the global ports.

Massive swings in container shipping demand combined with the recent impact of the Suez Canal blockage and the congestion at Yantian port in Shenzhen have been further indicators of how ports need to up their game to prevent or at least minimize market disruption.

“Better access to port infrastructure for larger, more energy-efficient ships and coordination by ports for standardised shore power plug connections are among the interim measures which would help carriers to keep on improving efficiency,” MSC CEO Soren Toft told the IAPH World Ports Conference while speaking on the Essential Role of Container Shipping & Logistics.

As explained, one of the additional factors that have contributed to the malaise in the market since Q3 2020 is a legacy of underinvestment in older port complexes.

Despite the headwinds, MSC, like the rest of the container shipping industry demonstrated major resilience in keeping supply chains moving, Toft added.

However, the impact on schedule reliability, especially this year has been significant. Data from Sea Intelligence shows that on a year/year level, the schedule reliability was down a massive 36.0 percentage points.

To help curb the impact and meet the growing demand, MSC has started 8 new services in the past few months, deployed available vessel capacity, and provided hundreds of thousands of additional containers, the company said.

“We are continuing to expand our footprint to really meet the demands of our customers,” Toft said.

“I realise from a service reliability point of view we must do better. It is also in our interests, because today we are consuming way too much fuel, we have too many ships in the networks, too many containers, all as a result of supply chains being stretched.”

The waiting game outside congested ports has seen MSC suffer around 10,000 days-equivalent of lost sailing time.

Digitalization is also expected to play a major role in improving the sector’s operational efficiency, Soren said.

One of the ways of taking the congestion challenges heads-on is the Just-in-Time arrival where companies can use digital platforms to facilitate the exchange of real-time data between ships and their destination ports.

Therefore, ports can bring down congestion and the risk of collisions, also lessening GHG and carbon emissions.

In a recent project, Hapag-Lloyd completed what has been described as the ‘world’s first digitally controlled port arrival.’ Nevertheless, greater uptake of the technology is needed for this to become a common practice in the sector.

Commenting on the intensifying focus on industry decarbonisation, Toft said that a global approach to policymaking, and regulation as well as a worldwide R&D fund, which could amount to $5 billion, or even $10 billion, would be crucial to catalyse the process. Meanwhile, collaboration with energy companies, engine manufacturers, and other shipping companies is seen as key to unlocking the handful of alternative fuels that must be developed urgently at scale.

“When those fuels are there, MSC will also transition to those fuels as quickly as we can,” he added. “Our focus is on decarbonising the world, less on identifying a target.”

Meanwhile, MSC has jumped on the LNG bandwagon having inked a deal to charter eleven dual-fuel newbuilds from Singapore’s Eastern Pacific Shipping as part of its pursuit of green goals.

The Switzerland-based company sees LNG only as a transitional fuel and not as a long-term solution. According to MSC, LNG and biofuels are currently the only commercially available options to significantly reduce emissions from shipping but none of them provides a full solution.

The carrier has also been exploring the viability of hydrogen and fuels derived from it as a possible fuel source for the future of container shipping.