Tuesday, April 09, 2024
April 9, 2024. Shanghai – In a radically changed business environment marked by volatility, uncertainty, complexity, and ambiguity (VUCA), building resilience is essential for global companies to navigate disruptions and move towards a greener future.
This was one of the key messages delivered by Executive Vice President and President Europe at Maersk Aymeric Chandavoine during a fireside chat at our Shanghai campus today.
During this engaging forum, Mr. Chandavoine and CEIBS Vice President and Dean Frank Bournois delved into the significant changes in today’s global trade, and how Maersk, an integrated logistics company, is responding to modern challenges and helping customers build resilience in their supply chains.
As a new global economic cycle begins, Mr. Chandavoine identified a polycrisis framework characterised by four major shifts, namely geopolitical turmoil, value chain disruptions, resource competition, and climate change.
“Five years ago, I would have never imagined that we’d have the Ukraine crisis and conflict between Hamas and Israel. There is also more and more restriction, and protectionism is coming back,” said Mr. Chandavoine, highlighting that the crisis in the Red Sea, a region that has long been an important artery for global trade, adds more disruptions to global supply chains and prompts shippers to divert routes south via the Cape of Good Hope.
“In the past, global trade grew faster than the economy. Now, it grows slower,” he continued.
Technological change, including the advent of AI, is another source of disruption. “AI is changing the way we do business. It creates opportunities, but also disruptions with new business models and consumer preferences,” Mr. Chandavoine explained.
The fourth shift is climate change, he continued. Taking the Panama Canal as an example, Mr. Chandavoine noted that 5% of global maritime trade goes through it, but now a severe drought in the region has led to shipping disruptions and posed challenges to global trade.
“Disruptions are becoming the ‘new normal’ and are here to stay. For many years, we were here to simplify and optimise the supply chain. Today, we need to rewire the supply chain to be cost efficient, and most importantly, to be resilient,” Mr. Chandavoine said, adding that resilience is the defining criteria and primary motivating factor for supply chain strategy.
In discussing the emerging trends in anticipating disruptions, Mr. Chandavoine pointed out that AI investment is a major success factor to help Maersk move from “reactive” to “proactive” in offering solutions for customers.
“When we give our customers the visibility, that their ships will be late, they would ask for optionality, what can we do as a shipment provider,” said Mr. Chandavoine, noting that AI-powered systems can be used to identify potential problems, offer customers real-time visibility into supply chain operations, and optimise delivery routes.
As a global provider of logistics services across all transport modes, the Danish company has also been in the forefront of decarbonisation and is committed to achieving net zero greenhouse gas emissions by 2040 across its entire business with new technologies, new vessels, and green fuels.
“The logistics industry is the third largest polluter in the world, with around 11% of the global emissions coming from supply chain, among which vessels is the major carbon emission sources […]. At Maersk, green methanol-fuelled vessels is a way to move forward, which can save up to 85% of carbon emissions compared with traditional fossil fuels,” Mr. Chandavoine said.
In 2023, Maersk successfully secured green methanol for the maiden voyage of the world’s first methanol-enabled container vessel, marking a significant step for the company and the industry’s efforts to reduce greenhouse gas emissions.
“When we started, there was no supply of green methanol. But if you don’t invest into green vessels, you don't create a supply. So, you need to take some risk into it. It will take time, but if you keep waiting for the perfect solution, then it's too late for the planet, you just need to act now,” he explained.
In talking about “China Plus One”, an emerging supply chain strategy that encourages multinationals to diversify their operations away from China to mitigate risk and access new markets, Mr. Chandavoine expressed confidence in Chinese foreign trade given that the country accounts for 20% of global export trade.
“When companies relocate their factories, what is super difficult is how to build the ecosystem around, how to build your network of suppliers and raw materials. When you move the factories to small countries, there is not enough capacity to bring those goods to US and Europe. It would take for more than three to ten years,” he concluded.
