- Confinement and border closings have caused major challenges for global shipping logistics.
- Jim Snabe, chairman of the world's biggest shipping line, AP Møller – Mærsk A/S, says "we can keep supply chains going."
- In light of ban on crew changes in most countries to minimise spread of Covid-19, AP Møller – Mærsk crew members have committed to staying onboard ships.
As countries locked down to slow the spread of Covid-19, many people rushed to stock up on essentials. Food, toilet paper, medication, hand gel, and surgical masks temporarily disappeared from shelves in many countries. What makes it even harder for countries to have enough vital supplies on hand is that so much of it is pieced together in complex supply chains stretching around the worlds. Take medical supplies: some 80% of active pharmaceutical ingredients used in US drugs, for example, are produced overseas, particularly in China and India.
Jim Snabe, who is chairman at AP Møller – Mærsk A/S, told the World Economic Forum’s COVID Action Platform last week that the Danish shipping conglomerate “is making sure that supply chains remain intact; that goods are being transported….that not only provide the necessary food in supermarkets but enable the healthcare equipment that was donated to go to the right places and also keep companies and economies going.”
Of the 80% of global trade that UNCTAD estimates is transported by sea-going vessels, much of it is moved by Møller – Mærsk A/S, which ships 20% of containers worldwide and 25% of refrigerated containers, largely for food.
But to keep operations going has not been easy during the pandemic. As we saw in China in January and February, goods stopped moving overseas during confinement. Truckdrivers delivering merchandise to ports were forced to stop. Containers that did make it to port sat on loading docks in Shanghai, the world’s busiest container port in 2018, and only one of seven of the world’s busiest ports – all in China. The US’s largest container port, Port of Los Angeles, saw its cargo volumes fall by about 23% in February 2020 compared to the year before. With airlines grounding most of their passenger aircraft fleets, the drastic reduction in air cargo is putting even more pressure on commercial shipping lines. This has caused supply chain havoc.
“We made a global crisis management team that takes care of our customers' supply chains,” says Snabe. “We have been able to help them to forecast, make scenario planning, prioritise critical deliveries, find alternative routes and with that I believe we can keep supply chains going.”
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But, besides shipping logistics seizing up, borders are closing and this is impacting seafarers. While most countries are allowing cargo ships to dock, they are not allowing crew members to disembark or swap out.
In a letter to four United Nations bodies and the World Health Organization (WHO), the International Chamber of Shipping (ICS) and International Transport Workers Federation (ITF) wrote, “In this time of global crisis, it is more important than ever to keep supply chains open and maritime trade and transport moving. In particular, this means keeping the world’s ports open for calls by visiting commercial ships, and facilitating crew changes and the movement of ships’ crews with as few obstacles as possible.”
Guy Platten, secretary general of the ICS, which represents more than 80% of the global merchant fleet, told Reuters, “We can’t ignore the fact that without crews to man our ships, trade will cease to operate. This means food, medicine and commodities will no longer arrive in ports and people will be directly impacted.”
Møller – Mærsk A/S is coping with the bans by foregoing crew changes. Snabe says, “Our seafarers have committed to stay onboard on boats so we don’t have any health risk there. They have made a significant commitment. We are making our assets run 24/7. That means vessels, ports, inland operations. We have just pre-announced our first quarter which shows the volumes are still where they need to be – China’s coming back from a supply point of view.”