London shipping week

VIBRANT SHIPPING DISCUSSIONS

London International Shipping Week, in September, featured about 250 in-person and virtual events. Felicity Landon reports on some of the highlights

There were physical events, online events and ‘hybrid’ events throughout the week and throughout the city. COVID-19, social distancing, vaccinations and testing were never far from the conversation. However, the dominant feeling was one of delight to be back, with colleagues from across the maritime sector fi nally able to gather, discuss, debate and network throughout the week.

Inevitably, many discussions during London International Shipping Week were focused on the ongoing huge demand for shipping, rocketing freight rates, port congestion and supply chain delays, alongside the urgency of decarbonisation, the debate around future fuels and digitalisation.

LISW21 CONFERENCE HIGHLIGHTS

Global trade seems to be unstoppable and that is despite the stresses on the supply chain, said Soren Toft, CEO of Mediterranean Shipping Company (MSC), at the headline LISW21 conference, “Driving Growth in a Disrupted World”.

“On the one hand we see raging demand for trade in physical goods and shippers jostling for capacity, and indeed we are not the creators of the demand – we are the servers of the demand,” said Toft in his keynote speech. “On the other hand, there is a growing knot of disrupted, tangled supply chains.”

A recent study showed about two-thirds of companies surveyed had supply chains in their conversations – this must be a world record in that the industry is suddenly getting so much attention, said Toft.

However, he said, there are still many people unaware of the role that transport, shipping and logistics play in making the world economy function. “We find ourselves having to remind a wider audience of the essential role we play in keeping trade flowing and our role in keeping the global economy functioning.”

Shippers were suffering ‘a lot of agony’ not only because of high freight rates but “perhaps more importantly service levels are poorer”, said Toft, noting that the problems started in 2020 “when we tried to ship 12 months-worth of goods in about eight months”.

. . . there is a growing knot of disrupted, tangled supply chains ‘‘

The first seven months of 2021 saw a 33 per cent growth of imports from Asia into the US, and even compared to preCOVID 2019, it was a 22 per cent growth, he said.

“Even though the supply chains are vast, they are not built for such massive changes, partly because capacity is not readily available, container terminals and land infrastructure don’t just expand like that but also because for years our industry has been marred by mediocre returns and that meant we have had to run our capacity at 90-95 per cent

8 Toft: some

“normalisation and cooldown” in the next 12 months

. . . there was no buffer capacity when things really went off the rails ‘‘

utilisation, meaning there was no buffer capacity when things really went off the rails.”

He described massive congestion in most major ports around the world, where “we easily have waiting time between three and five days”. Normally MSC would run a service between China and the US West Coast utilising five or six ships, he said. “Today we utilise nine, ten, and even then we struggle to provide a good service. We have many more billions of dollars tied up in ships and containers and frankly we are unable to offer the service that our customers demand.”

MSC and its competitors are ‘very preoccupied’ in trying to improve the service to customers but are impacted significantly by congested ports, lack of infrastructure, lack of truck drivers and lack of rail capacity, said Toft. “We have done our utmost to ease the operational stress. We have added a lot of capacity, trying to introduce new services and solutions, but it isn’t enough.”

Congested supply chains are very much impacted by what happens in the terminals, trucks, warehousing and rail, “and there it will only abate the moment the global demand somewhat abates”, he said.

Toft expected to see some ‘normalisation and cooldown’ in the industry in the next 12 months.

DECARBONISATION: NO DECOUPLING

Turning to decarbonisation, he said meeting global trade demand must not be decoupled from the urgency to eliminate emissions.

“In order to decarbonise the shipping industry, we must develop new technologies, new fuels, new infrastructure, at a pace never previously seen. Frankly, the real bottleneck is carbon-neutral fuels at scale. It is crucial that significant money is set aside for industrywide research and development.”

MSC supports a global market-based measures incorporating global carbon pricing that could help the industry decarbonise by reducing the gap between fossil fuels and zero carbon fuels, said Toft.

“We need to decarbonise shipping. The ships can be built, I know the engines will be ready, and what we need are scalable fuels. Let’s put significant money into research and development for the right global solutions.”

Maritime UK: Spotlight on Human Resoures

The UK’s coastal communities are set to lose at least 49 per cent of their young people, with the majority of 18 to 24-yearolds already planning to move away, according to research by Maritime UK and the Local Government Association Coastal Special Interest Group (SIG). However, 70 per cent of those interviewed said they would be more likely to stay if the right career opportunities were made available.

Launching their Coastal Powerhouse Manifesto during LISW, Maritime UK and the Coastal SIG urged the Government to come up with a clear strategy to “stem the brain drain”.

The document sets out proposals to boost connectivity to the rest of the country, extend Freeports benefits to all coastal areas, install a shore power network across the coast to charge tomorrow’s “Teslas of the seas” and develop new skills in coastal communities, including digital skills.

Speaking at the launch event, Tim Morris, Chief Executive of the UK Major Ports Group, said that while the sea is by far the UK’s largest gateway for trade with the world, the maritime story is not just about trade. Established industries such as tourism and fishing still have important roles to play and the coastal regions are also still ideal for manufacturing industries, technology innovations and service providers, he said.

“The coast is a wonderful and vital source of natural capital for the UK. Almost scandalously for an island nation, our coastal regions and communities within them can suffer very significant economic challenges. This is not the case everywhere, but coastal areas on average perform notably worse in UK averages on indicators such as multiple deprivation, unemployment and wages.

“It doesn’t have to be this way. It is not inevitable that the coast has to suffer some of these issues. There is a real job to do in levelling up the coast as a region in its own right and huge opportunities to do so as well.”

PLA Cites Era of Innovation

There have been few periods when what happens on the Thames has been more important for the country, said Christopher Rodrigues, Chairman, at the PLA’s reception onboard the Silver Sturgeon.

The river’s role in the Great Plague and the Fire of London were well documented by Pepys, he said, and its role in the conflicts of the 20th century were a source of pride. The Port of London kept supplies of food, fuel and medical supplies flowing during the pandemic. “Like all ports during the pandemic, London delivered – and it continues to deliver today.”

The future success of the Thames depends on innovation, said Rodrigues, who highlighted the latest investments at DP World London Gateway, the opening of Forth Ports’ Tilbury2 expansion, DHL’s initiative to move light parcels along the river, and the trials by CEVA Logistics and Livett’s Group of a riverboat delivery service to Guy’s Hospital, central London.

Recognising that there would be unprecedented change driven by decarbonisation, new technology, changing patterns of consumption, new trading links and port cities changing their shape and role, the PLA is ‘refreshing’ the Thames Vision, its framework for the river, and this will set out emerging possibilities, said Rodrigues.

“The future can’t be delivered by the PLA alone; it depends on partnership, a coalition of the willing. We need to make sure we develop a skilled workforce to meet demands and secure the infrastructure developments we need.”

BPA: Focus on Smarter and Cleaner

The British Ports Association (BPA) and the UK Chamber of Shipping hosted an event to screen two new programmes showcasing the maritime industry’s transition to a smarter future.

The BPA programme, Gateways to Growth, reveals the people, communities and organisations behind Britain’s ports, highlighting ports’ vital contribution to society and the innovations shaping their pathway to net zero.

The Chamber’s programme, Making Waves: The Future of Shipping, highlights efforts underway and calls for continued ambitious action to decarbonise.

Although not technically part of LISW, the following week the BPA hosted its annual lunch at the Drapers’ Hall.

BPA chairman Neil Glendinning noted that when much of the country was ‘closing and putting up the shutters’ during the COVID-19 lockdowns, ports carried on and food, fuel and medical supplies were all readily available.

Thanks to COVID-19, and also the drama of the Ever Given in the Suez Canal, “now more than since the Second World War, the public has become aware just how finely balanced supply chains are, and the importance of ports”, he said. “Let’s not lose this opportunity of our newfound fame. We need to be able to recruit and retain talent and exploit all the opportunities that come our way.”