This year’s line-up of container industry leaders shows how data is becoming as important as steel while company consolidation puts increasing amounts of influence in the hands of fewer executives
“We are no longer a shipping line, but a mobile inventory management company,” one executive recently joked in private. Like many a word said in jest, there was more truth than intended. His job is to integrate a particular shipping line’s terminal and inland operations with its shipping network and his words indicate the growing importance of understanding how the entire container supply chain works.
In this respect, executives whose job it is to collect, interpret and transfer data to other parts of supply chain networks are gaining increasing prominence. In this year’s container shipping industry leaders we have tried to reflect that shift.
Søren Skou, Maersk Group chief executive
In Q4 last year the Maersk Group announced one of its most radical managerial changes in its history. The departure of previous group chief executive Nils Anderson made way for company veteran Soren Skou to take the top job, while also retaining his role as chief executive at Maersk Line.
It has become increasingly clear that the fortunes of both the terminal operating arm and the logistics and freight forwarding concern Damco will be increasingly subservient to the overall needs of Maersk Line, which obviously dominates the transport and logistics division.
But that should not create the impression that Mr Skou is some sort of corporate apparatchik. Far from it. The group’s innovation department appear to be busier than ever – Damco has come to the market with its online Twill freight booking platform; Maersk Line has pressed ahead with its remote container management system for reefer containers and now made it available to shippers (the results of which are keenly awaited) and senior APM Terminals executives are now firmly into the integration project, given their role in a port operator has often been to bring sea, quayside and hinterland operations together.
And then there is the latest in the big acquisitions to digest – the takeover of Hamburg Süd is expected to be completed in the final quarter of this year and the integration of the German carrier next year will represent Mr Skou’s next considerable challenge.
Rodolphe Saadé, CMA CGM vice chairman
Speaking of considerable challenges, there cannot be many in the container industry who expected CMA CGM to turn around so quickly the fortunes of APL, Singapore’s stricken container carrier that was bought by the French carrier in 2015, with the acquisition completed in September 2016. However, CMA CGM’s most recent results led the liner industry in terms of profitability and included APL posting a US$89.2M net profit after years of stubbornly staying in the red under its previous management. It also propelled CMA CGM to the top of the league in terms of EBIT margin – it posted a margin of 8.9% in the second quarter, compared to the 6.2% margin recorded by Maersk.
This illustrated once again the skill that CMA CGM – still controlled by the Saadé family and a close coterie of advisors – has in executing mergers and acquisitions is probably unmatched in the industry. And it has not stopped with the APL purchase – since then it has also acquired Maersk’s Brazilian cabotage subsidiary Mercosul and New Zealand-based Sofrana Unilines while also launching an incubator for digital start-ups in Marseilles. CMA CGM is also leading the way on LNG, after announcing in November that it was fuelling its new 22,000 TEU newbuilds with
T o pthis fuel – the largest container ships to be powered by gas.
Diego Aponte, MSC chief executive
2017 has been a relatively quiet year – if such a thing exists in liner shipping – for MSC’s chief executive Diego Aponte, son of the company’s legendary founder Gianluigi Aponte. His most important decision this year has probably been signing an order for eleven 22,000 TEU vessels that will be built by South Korea’s Daewoo Shipbuilding & Marine Engineering for delivery 2019-2020 and are expected to be deployed on 2M’s Asia-Europe services.
After the ruinous rate wars of recent years, there has been considerable concern in the industry that this order – along with orders for 21 ULCVs for Cosco, 11 for Evergreen and nine for CMA CGM – that a new era overcapacity will occur. Mr Aponte does not appear to share this concern however. “A significant number of 13,000 TEU and 14,000 TEU vessels will come off-hire in the coming years and the new order is expected to effectively replace this fleet, rather than substantially increase MSC’s overall capacity,” the company said.
Enrique Razon, ICTSI chairman
Enrique Razon has been chairman of International Container Terminal Services Inc (ICTSI) since 1995 and is recognised as the chief architect behind the development of one of the Philippines’ few genuinely world-class companies. Until recently, ICTSI was a niche operator, prepared to go into concessions where larger operators would not, but that changed with its state-of-the-art development in Melbourne, Australia, a fully automated terminal that has deployed some of the most advanced technology in the industry.
However, ICTSI has also retained its commitment to developing emerging markets by launching the Aguadulce terminal in Colombia with PSA and forming a consortium to dredge the Congo river to enable mainline vessels to begin calling at the democratic republic of Congo, which has remained largely unconnected from global container supply chains.
Mong-Jye Lee, Evergreen president
Assuming that the takeover of OOCL by COSCO goes ahead, Taiwanese carrier Evergreen will find itself the junior partner in the Ocean Alliance and will face some increasingly important strategic decisions. The pace of consolidation in the sector has become frantic over the past year and the fiercely-independent Evergreen will undoubtedly be the focus of more takeover talk – either as buyer or target, given its medium size.
Jens Meier, Port of Hamburg chief executive
Hamburg remains the container gateway for the German economy but has become increasingly constrained by the draught of the river Elbe. Currently, the largest ULCVs are only able to reach Hamburg’s terminals at high tide which, given the vast amount of cargo they exchange in a single call, can quickly constrict the port in a surge of congestion and has seen Hamburg lose its place as second-largest port in Europe to Antwerp.
While the German courts have finally given the go-ahead for the Elbe fairway to be deepened, the “stop work order” issued four years ago remains in place, with the port first having to address two major environmental concerns. That has now begun, and the actual work could begin sometime next year.
Mario Cordero, Port of Long Beach executive director
Former head of the Federal Maritime Commission Mario Cordero returned to his native Long Beach after leaving the government agency. During his first tenure at Long Beach he helped spearhead the port’s pioneering Green Port Policy in 2005, aimed at reconciling economic growth and environmental stewardship to achieve long-term, sustainable port development. He will now be helping to shape the US port industry’s response to the deployment of ULCVs on the transpacific trade and the consolidation of services into the three alliances.
Ahmed Bin Sulayem, DP World group chairman and chief executive
The container terminal operating sector finds itself entering a new phase, as the world’s shipping lines consolidate into the three mega-alliances. This is creating new challenges in terms of developing and managing terminal capacity for port operators, and particularly terminal investment strategy. A few years ago this was mainly about paying the right amount for development projects and not being surprised in the following years to see operators withdrawing from projects that are deemed to be financially unviable.
Mr Bin Sulayem has shown himself to be unafraid to take these hard decisions, as the company’s recent announcement that it is set to quit its operation in the Indonesian port of Surabaya has shown.
Over the last year or so it has gone in a markedly different direction to other terminal operators. It has become increasingly involved in operations deep into continental hinterlands, with a series of deals and agreements with national governments to help create new intermodal terminals, free zones and logistics activities. DP World has even embraced innovation in a way normally associated with the USA’s Silicon Valley, with a multi-million dollar investment into hyperloop technology, which could eventually see containers transferred from Dubai’s quaysides to inland container terminals on passive magnetic levitation trains.
Benoit de la Tour, president of Navis
Automation of container handling operations is becoming an increasingly key factor in optimising cargo flows through one of the major bottlenecks in the container supply chain – terminals. As vessels get bigger and the chunks of cargo being transferred from land to ship in a single port call correspondingly larger, the information exchanges needed to monitor containers and the container handling equipment become ever more complex.
US-based terminal software developer Navis is in the virtually unassailable position as market leader of terminal software – an estimated 75% of the world’s ports employ a Navis system of some sort. So extensive is its reach that any firm that is developing other terminal technology has to consider how it will link up with Navis.
Ryan Peterson, chief executive of Flexport
It is by no means the largest freight forwarder, but Silicon Valley start-up Flexport has really forced the digital debate right to the fore. That is solely due to the energetic Ryan Peterson, who has built up a company with offices around the world within the space of a few short years.
It is still a relatively small operation and in many respects Flexport is no different to any other freight forwarder, but its centrepiece is a user-friendly online dashboard that allows both shippers and shipping lines new levels of business transparency.
The fact that the company has effectively been designed by software engineers represents the beginning of a paradigm shift in the industry – accentuated by Mr Peterson’s very visible presence in media and at industry events and a willingness to talk openly about issues that many other executives have preferred to remain silent about.
Xu Lirong, China COSCO Shipping Corp chairman
A huge amount of industry power is going to find itself to the desk of COSCO’s Xu Lirong in the next couple of years. The merger with China Shipping was largely completed during the past 18 months and now it is set to acquire Hong Kong’s famously well-run OOCL for US$6Bn, making it the third-largest shipping line, and giving it the interesting option of being able to offer a two-tier premium or basic shipping service.
But the extent of his influence is likely to go far further, given the pivotal role that COSCO will play in the development of China’s One Belt, One Road initiative (OBOR). COSCO already operates the Greek hub of Piraeus, which it has begun using as a beachhead for cargo flows into Europe, and its ambition does not stop there. Its ports division has been one of the most aggressively acquisitive in recent months, eagerly buying stakes in ports wherever they are for sale, and not just in Europe. The scale of OBOR is colossal and COSCO is a key cog in realising its ambitions.
John Fay, INTTRA chief executive
Around one in every four container shipments booked globally is done over INTTRA’s system so, given that last year the company celebrated its 15th anniversary, it has a well-founded claim to being one of the industry’s true digital innovators.
After playing a key role in developing the electronic verified gross mass (VGM) document last year, it has now begun switching its attention to other areas – extending the coverage of its services into the hinterland and developing blockchain solutions for the industry.
It has formed a blockchain working group. There are a variety of firms – including leading liner companies, freight forwarders and IT providers – that are working on blockchain solutions, but Container Shipping & Trade’s view is that INTTRA is best placed, given its neutrality, to steer how the technology is ultimately deployed.
Ed Feitzinger, Amazon vice president of global logistics
Ed Feitzinger was the highly respected chief executive of UTi Worldwide before he joined Amazon in June 2016 to spearhead its build-up of logistics and freight forwarding activities.
The US Federal Maritime Commission awarded one of Amazon’s Chinese subsidiaries an ocean transportation intermediary licence in January 2016, allowing it to operate as a sea freight forwarder and creating the possibility of delivering products direct from manufacturers to consumers on a global scale. What is evident is that Amazon’s vast power, partially derived from the fact it holds so much data, will inevitably mean that its influence on container supply chains is only just beginning and Mr Feitzinger seems to be in the position to decide how it is to be wielded.
Rolf Habben Jansen, Hapag-Lloyd chief executive
Hapag-Lloyd has been ahead of the curve in terms of the industry consolidation process in recent years, but has simultaneously found itself overshadowed by events elsewhere. Its acquisitions of CSAV and UASC – although they have effectively become mergers given that the owners of those companies are now among the largest Hapag-Lloyd shareholders – have strengthened its hand on the increasingly important north-south trades (in the case of CSAV) and neatly equipped it with 18 ULCVs thanks to UASC. As a result, it now finds itself as the senior partner in THE Alliance, a position cemented by another recent US$414M capital increase.
Chief executive Rolf Habben Jansen has not only been a leading advocate of consolidation in the industry, but is also one its most imaginative thinkers about other challenges it faces. For example, he proposed creating an emergency alliance fund in case one partner faced bankruptcy and expressed the idea that alliances could now begin to extend their joint operations of services into container supply chains’ hinterlands.
Jeremy Nixon, ONE chief executive
The three Japanese carriers MOL, NYK and K Line have not operated large enough fleets to warrant a mention in the list of industry leaders before but with the forthcoming merger of their container operations into the Ocean Network Express (ONE), Mr Nixon, the NYK executive who has been chosen to lead the combined operation, that changes. As a combined force they will be in the top 10 largest container ship operators.
Knut Ørbeck-Nilssen, DNV GL maritime chief executive
The employment of digital processes has been wholeheartedly embraced by many classification societies, none more so than DNV GL, which has developed and enthusiastically pushed the use of electronic certificates. Over 45 flag state administrations have granted DNV GL authority to issue electronic statutory certificates and more are expected.
Underpinning its services to the wider container shipping industry is DNV GL’s Veracity data platform, which has been developed with Microsoft Azure. This seeks to use emerging big data and predictive analysis technology to enable connections between multiple stakeholders and data sets, allowing carriers to integrate their data, assure its quality, secure it and offer controlled access to suppliers to run analytics.
The potential for cost savings and operational optimisation for carriers has never been greater.
Philippe Donche-Gay, Bureau Veritas president of marine & offshore
Bureau Veritas has been involved in a number of important initiatives this year, including spear-heading some important LNG ‘firsts’ in the container ship industry. One of the most headline-grabbing is that it is classing CMA CGM’s LNG-fuelled 22,000 TEU box ships. It also classed the world’s first conversion of a container ship to dual-fuel LNG – Wessels Reederei’s Wes Amelie.
In September 2017 it joined the Global Industry Alliance (GIA) which will support energy-efficiency measures for ships and shipping. Philippe Donche-Gay highlighted the importance of this, saying “Whether it’s a better understanding of hull structures, digitisation, gas-fuelled and hybrid systems or the many other areas of research and development that are leading to practical solutions, our marine and offshore division … will be able to contribute towards this important initiative.”
Nick Brown, Lloyd’s Register marine & offshore director
Along with other class societies, Lloyd’s Register (LR) has been involved in a range of initiatives from alternative fuels to digitisation, but its marine and offshore director Nick Brown should be especially commended for his role in cyber security – something that has shot to prominence this year after Maersk’s cyber-attack.
LR launched its Cyber Secure programme in March this year, following last year’s launch of guidelines and a notation focusing on this topic.
The Cyber Secure programme is a set of services designed to help ship operators understand how cyber secure they are now and what level of security they want to achieve in future. Added to the mix is support for clients to address the changing cyber security regulatory environmen
T t .
Mr Brown told Container Shipping & Trade that this would not be the end of the journey. “As connectivity becomes more affordable and commonplace there will always be malicious hackers there, so we are looking at how to build on our current emergency and response service to use it for cyber threats,” he said.
Chris Welsh, Global Shippers Forum secretary general
led the lobbying charge that eventually saw the European Union rescind the block exemption from anti-trust legislation enjoyed by container shipping. role at the UK’s Freight Transport Association means he will also be a key voice in the logistics industry’s response to the how the Brexit negotiations shape up in the months leading up to the UK’s departure from the EU at the end of March 2019.
Michael Khouri, Federal Maritime Commission acting chairman
With the continued consolidation of liner shipping companies and alliances, competition regulators are likely to face another busy year. While, in the EU, regulators are competition experts who occasionally train their eye on the maritime sector, the Federal Maritime Commission is tasked by Congress to constantly monitor developments in the sector. As a longstanding FMC commissioner appointed by Donald Trump, Mr Khouri’s approach will likely reflect the way politics is changing in the world’s largest economy.