OVER 35,000 B2B USERS DAILY

Dubai 2020 | TRANSPORT | VIP INTERVIEW

TBY talks to Richard Morgan, Regional Managing Director West & Central Asia for Maersk, on innovation in the supply chain, the company's global portfolio, and regional competition.

How does Maersk apply innovation to its operations to increase transparency and efficiency in shipping and supply chain solutions?

We approach innovation and technology in a number of ways. First, our current vision is to become the global integrator of container logistics. That is our response to a changing industry wherein customers want more end-to-end solutions and a more managed service and product. We bring innovation through technology. Our website is one of the largest B2B sites with over 35,000 daily users transacting 20,000 bookings. This online booking management is, for our industry, a step forward. We have also automated our customer quotations. In addition, we are working hard to bring innovative ocean products to our customers. For example, we have an online product that allows for an instant quotation, instant booking, and guaranteed space on a pre-defined vessel. Customers can book with confidence and know their container will be on the right ship and arrive at the right time. We are witnessing significant volumes for this product, with the uptake developing much faster than we originally planned; particularly, our customers in the UAE, Saudi Arabia, and India have really been embracing the product. Moving on to efficiencies and vessel operations, new technologies improve efficiency and speed. We use less fuel in the shipping process, allowing for a better environmental approach to our ship operations. Innovation permeates both the commercial and operational sides. We are also building a lot of new land-based products, including trucking, customs, storage, and warehousing. We are doing that around the world and are investing heavily in this region. We have launched a number of local products in the last month and are seeing real commercial traction. These new products will represent a significant amount of our planned growth for 2020. Trade finance is another example of an emerging segment we are looking in to. In the last three years, since launching our financial product, we have dispersed loans of about USD650 million to more than 200 customers, which have shipped about 60,000 containers with us in that period. The UAE is our leading territory in the world for this product. Finally, I will mention TradeLens, an open and neutral industry platform built on blockchain technology, jointly developed with IBM. Around 60% of the world's global container fleet and other shipping lines have signed up for it. TradeLens is signing up ports and customs authorities around the world. As all of this is connected, our customers clearly see a compelling value proposition emerging. Through TradeLens, we can bring a lot more transparency, reliability, and security to our client's supply chain.

What is Dubai's significance in Maersk's regional and global portfolio?

Dubai is clearly emerging as a significant part of the Maersk portfolio. There is tremendous potential, if you look at e-commerce around the GCC and the investments being made in free zones. We are developing products and services to support that initiative. What's more, Dubai has the opportunity to be a hub or significant point of entry across the GCC with the emerging cross-border products, allowing land transportation into Jordan, Oman, Saudi Arabia, and elsewhere. We can provide a more secure service on an end-to-end, rather than fragmented, basis.

Are there any markets that will pose credible competition?

From our point of view, UAE is well positioned geographically and strategically. The key here is infrastructure and its availability, which is vital to driving trade. The region has a large multimodal transshipment hub and a regional gateway port in in Salalah, Oman. With APM Terminals we hold a 30% stake in the port operation company and have a concession agreement with the government of Oman that forms part of our east-west trade. However, a significant chunk of our volume moves through Jebel Ali. We work closely with our partners in DP World and other organizations around the UAE. There will be challenges; however, from our point of view challenges bring new opportunities. We see new opportunities in King Abdullah Port, for example, and opportunities for our petrochemical customers in the Kingdom. We are creating new products to increase the flow of Saudi exports to Asia and other parts of the world.

How do Maersk and Dubai plan to leverage geopolitical trends?

The geopolitical situation is constantly moving, and so far, the impact has been quite manageable. We have seen shipping from China move to Southeast Asia and India. We have such a heavy global footprint and strong representation in these markets that from our point of view the impact has so far been manageable. Our global presence offers us the opportunity to reassess the fleet, becoming less centered on certain markets and more diversified. It offers growth opportunities and new infrastructure investments, for example in Vietnam, to support that growth. The challenge really comes from managing the fleet. We do have a number of initiatives at the moment. We will continue to invest in China, that goes without saying. We are concentrating on Southeast Asia to create the infrastructure needed to enable faster growth. Maersk is also heavily investing in India. We have large ports, transport- and logistics business there and are finalizing plans for future organic and inorganic growth in India. Saudi Arabia is the second-largest market in the world for refrigerated imports. That gives us real opportunity to develop our cold chain in Saudi Arabia and the UAE. We continue to invest in the Americas and Europe, where we are building our land-side infrastructure to support our strategy to be the integrated, end-to-end provider. Our investment is universal with interesting things happening in this region, ranging from anything between Turkey and Bangladesh.

What differentiates Maersk from the competition?

The company is in a clear transformation from offering legacy, traditional freight-dominant products to becoming the global integrator of container logistics simplifying customer's supply chains. Our advantage comes in several different areas. First, we are a strong brand, perhaps the most recognized in our industry. We have become the most recognized Danish brand in the world, building trust and delivering high levels of service and innovation for our customers for 120 years. That allows us to be able to move into logistic spaces with confidence and high financial stability. Aligned with this, we are ready to make the necessary adjustments to make the strategy come alive through both organic and inorganic growth. That allows us to move with pace and speed. We are a couple of years into the transformation now and logistics and services continue to grow as part of our overall portfolio. Because we are both an asset owner and a company that offers landside services—combined with digital innovations like for instance our website, which today is one of the world's largest business-to-business transaction site, TradeLens, and Maersk's digital value proposition for small and medium enterprises (SME's) called Twill—customers can trust Maersk along every step of the supply chain. This brings confidence to companies utilizing the supply chain for commercial advantage as they cannot afford supply chain interruption. With arguably the finest customer base in the world, recently we have put more effort in listening to customer feedback. We are getting a clear outline to our vision and are building products to match that expectation. We have a methodology whereby we can quickly test our offerings, listen to customer feedback, and then make the necessary modifications to create compelling customized solutions. The Middle East and Indian markets, particularly Saudi Arabia and northern India, are pilot areas for our new online guaranteed shipping product, called Maersk Spot. We will continue to drive innovation while listening to customer needs. To accelerate the transition to carbon-neutral shipping, Maersk has set the ambitious target of having net-zero CO2 emissions from operations by 2050. . We are investing heavily in that to have the right environmental impact and hope to inspire researchers, technology developers, investors, cargo owners and legislators to come together in co-development and sponsorship of sustainable solutions that we are yet to see in the maritime industry. The future vision is about end-to-end supply chain services that are digitally enabled and highly innovative, supporting customers in their growth needs and adding value to the brand.