by Lloyd's List

9 October 2024 (Lloyd's List) - MEDITERRANEAN Shipping Co is putting ports at the centre of its network strategy as it seeks to insure itself against the next black swan event.

“Our new network is designed around agility, adaptability, speed and also operational flexibility,” chief executive Søren Toft told the International Association of Ports and Harbour’s World Port Conference in Hamburg.

“We have decided to do an extensive port coverage because one of the trends we have seen is that supply chains are changing. They are no longer as centred on a few countries as they used to be.

“For risk management purpose, for not putting as many eggs in one basket, for not relying on only a few countries in the world: for those reason we believe a more broad coverage is needed.”

Toft said the trend in supply chains would be to become more distributed in the future.

But this did not mean an end to globalisation or a move to near-shoring.

“I don’t believe the Americans, which are still today the biggest consumers in the world, can produce everything themselves, but they will chose to source from a wider range of origin countries,” he said.

MSC’s new network, which would see it walk alone outside the alliance structure, was designed to allow it to react to market conditions with speed and agility.

Two black swan events in the past few years – Covid and the Houthi attacks in the Red Sea – meant that MSC wanted to prepare itself for whatever came next.

“For the terminal and port community, it means that our new network will call at an increasing number of ports because we want to serve a range,” Toft said.

“We are calling at 12 ports in Asia to 13 ports in northwest Europe. This is a vast difference to our competitors and gives an indication of how we think of coverage, about networks and about direct calls.”

MSC will have 34 loops in total on the east-west trades, with customers offered a total of 1,900 direct port combinations in total.

“We want to give our clients the certainty that when they load on our ships they have a direct sailing to the destination at the other end,” Toft said.

“What we’re seeing is that direct corridors are important, transit times are important. We are fortunate to have the size to do that.”

Part of this strategy has involved continuing to invest in ports, he said.

“We’re not just investing as a business opportunity alone. We have interests in 100 ports that allow us to maintain operational control.

Toft draws and analogy between calls at controlled ports and Formula One pitstops.

“If we can be out in one or two hours faster through the productivity of the terminal and the procedures, that drives efficiency and sustainability,” he said.

“The fuel we can save by having ports be more efficient is a direct contribution to our climate targets.”

Toft also reiterated his call for “true global regulation” on climate goals.

“We need pragmatism,” he said.

“We will not be able to rely on one single fuel. The real problem to make shipping green is the availability of fuel. We have made our own decisions, as we’re not getting a lot of assistance from policy makers, to go in the direction of LNG because it is available, and because we can see a potential pathway to bio-LNG and maybe one day to synthetic LNG.

He said the company’s orderbook of 150 vessels was a “pretty good buying signal” to fuel providers.

“We have invested $20bn and have 20 ships on the water already, so hopefully that is a good signal to ports as well,” he said.

“I don’t believe the right solution is to have four or five fuels. It will be a good outcome if we can land on two or three fuels.”

But this required the right infrastructure from ports, he said.

“We need to make sure you have the right fuels for us.”

Despite the challenges facing shipping, Toft remains optimistic about the outlook for the box sector.

“GDP is still growing,” he said. “The outlook for 2025 is another 3% growth. We have no reason to be pessimistic."

While the days of 10% annual growth in container shipping were gone, in the first seven months of this year container volumes had grown 7%.

“This is extremely healthy. There are many things to be depressed about but the world is still growing."