Following DNV GL’s maritime renaissance PSA International is claiming an industrial reformation as the pace of change accelerates and the adoption of new technologies gathers pace as a result of the Covid-19 crisis.
Group CEO at PSA International Tan Chong Meng in an online address said that as an industry shipping must stand ready to reform and metamorphose as trade patterns change. A transformation is taking place in business and in the workplace, performing at a different pace in a new economic environment, according to Tan.
“We are confronted with a different situation and also a different pace of change. For instance, we can all sense that digital adoption has rocketed in the last three months, the race to the next normal is on,” claims Tan.
Freightos CMO, Ethan Buchman also talks of change driven by the new normality. For Buchman the uptick in China to US West Coast freight rates, a 12% increase over the last week to US$1,840/FEU, could be evidence of a number of changes, such as an increase in personal protection equipment being transported by sea rather than by air; or a re-stocking of inventories by US businesses; or in anticipation of another round in the US’ trade war with China.
“But another possible driver of an uptick in ocean volumes is the Covid-19 boost to eCommerce, as some carriers rolled out express ocean services to accommodate online sellers, and even UPS is pivoting to focus on eCommerce orders,” said Buchman.
A digital transformation driven by a pandemic will it seems lead to what Tan calls the reformation, where our mindset necessarily changes to meet the new demands being made on us as staff and transforms the way we view technology.
Tan argues that one “should never waste a crisis.” And for the PSA International CEO that means being prepared for the changes that he believes are coming. A reverse globalisation, which he calls regionalisation and others refer to it as localisation, is a possibility.
Tan believes that producers and manufacturers may focus on shifting their production centres to regional manufacturing zones such as Central and Eastern Europe, India and Southeast Asia and Mexico.
This would have the benefit of shortening supply chains, making it easier to manage inventory and quicker to move products to market. Feeder vessels would be critical to such a move, with local ports closer to markets also seeing something of a renaissance.
“Intra-regional trade would grow faster compared to inter-regional trade and for our transhipment activities the hub and spoke excellence could become the preferential service over relay transhipment,” explained Tan.
Multinational customers would be interested in finding strategically located regional logistics hubs adjacent to ports, railways, roads and airports. The “Gamechangers could be intermodal seamlessness and efficiencies between the modes of transport, aided by digital continuity and control across the transport modes,” said Tan.
Tan’s reformation would be a consequence of the Covid-19 crisis, but the initial target must be to weather the Coronal storm. “Bankruptcies will increase, unemployment pressure will rise and, although consumption will ultimately return, it will remain sluggish in the medium term,” warned Tan, who added that PSA has been “set back” two to three years depending on how long the pandemic crisis lasts.
In an effort to deliver the trade reformation, a new joint UN project established to help governments and businesses maintain transport networks and keep borders operational to allow the free movement of goods and services, while containing the spread of the Coronavirus.
The project was launched in May and will implement UN solutions, standards, guidelines, metrics, tools and methodologies to help developing countries build transport, trade and logistics resilience in the wake of Covid-19. The plan is associated to the UN framework for the immediate socio-economic response to Covid-19.
The UN initiative brings together a number of UN agencies, including UNCTAD the United Nations Conference on Trade and Development and five UN regional commissions for Africa (ECA), Europe (ECE), Latin America and the Caribbean (ECLAC), Asia and the Pacific (ESCAP), and Western Asia (ESCWA), with funding managed by the UN Department of Economic and Social Affairs.
According to an UNCTAD statement, “The project puts a premium on global reach and regional presence, international co-operation, as well as exchange of knowledge and good practices from all over the world.”
The aim of the project is to offer training for governments in developing countries to adapt to new post-pandemic conditions by utilising UN expertise, standards, tools and guidance, while considering specific and local conditions.
Three clusters that have been designed “to match existing and emerging standards and best practices” in transport and trade including new demands arising from Covid-19 on cross-border freight transport operations and trade transactions.
UNCTAD says the first cluster focuses on contactless solutions and good practices. That is the movement of goods while reducing physical contact between people operating cross-border supply chains to maintain the flow of freight while ensuring the virus cannot spread.
“This will be done by implementing UN conventions and standards for seamless harmonised electronic exchange of data in digital transport corridors, border crossings and trade operations, as well as developing smart rail and road connectivity,” said UNCTAD.
In the second cluster focuses on maximizing seamless connectivity. That is eliminating impediments to cross-border trade and transport operations arising from the Covid-19 crisis.
The aim is to promote collaboration between border agencies through “national trade facilitation committees”, which will develop automated customs services and identify non-tariff barriers.
Lastly, the third cluster will “focus on collaborative solutions on transport, trade and logistics operations by strengthening regional and sectoral cooperation to facilitate joint actions and solutions in responding to the Covid-19 pandemic.”
Particular attention will be paid to international transit issues, that are “multilateral, and sectoral co-operation for ports as nodes of the global maritime shipping network, rooted in regional and national contexts.”
The three work clusters build on the UN’s conventions, standards, tools and instruments, including UNCTAD’s Automated System for Customs Data (ASYCUDA), the eTIR International System (TIR Convention) carnet and trade data exchange standards of the UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), as well as the Framework Agreement on Facilitation of Cross-border Paperless Trade.
In addition, the clusters will tap into regional intergovernmental co-operation platforms, analytical work and capacity-building programmes of the five UN regional economic commissions, said UNCTAD.
The crusade against the virus must be won before measures can be implemented for the period AD (After the Disease). Planning is critical for both trade in general and the maritime sector in particular, in order to maintain a virus free, or supressed, environment. Trade is unlikely to return to the period BC (Before Covid) but it will still happen, even if it is in a different form. Planning, in this scenario, is shipping and trades’ only salvation.