Despite the current trade climate imports to the US remain strong and are currently rising according to Soren Skou, CEO of A.P. Moller – Maersk, the world’s largest shipping company. Skou also discussed their use of technology to decrease fuel usage which is part of an overall initiative that the company has taken to digitize operations.
Imports to the US Are Strong
Freight rates have gone up more than 5 percent so that’s a positive drive. We are also seeing good margin and appropriation in our other businesses, particularly in our logistics and ports business. Right now the global trade is growing at a reasonable pace and container freight rates are going up.
Imports to the US are strong. We see our customers most likely building up inventories ahead of any tariff increases that may hit in the new year. Obviously, there will be a bill to be paid for that, so to speak, when that movement comes to an end with lower demand growth on the ocean in the first quarter of next year. We are prepared for that.
The overall picture for the global trade is one of slow but reasonable growth but at the same time very moderate growth in capacity. It’s like a narrowing of the supply-demand balance and that leads to slightly higher freight rates, which of course is very positive for the industry.
Effectively Using Technology to Reduce Fuel Use
We work very diligently with our fuel consumption and fuel efficiency. We are slowly but surely able to reduce the amount of fuel that we use per container by deploying technology, by being better in the way we drive the ships and so on. Overall, as we have volume growth, we are also seeing a slow increase in the demand for fuel. We have plenty of fuel capacity available from the global refineries so it’s not like we are going to run out of fuel anytime soon.
Earlier this year Skou talked about the importance of technology to Maersk:
The most important thing for A.P. Moller – Maersk is to digitize. We do have an agenda to digitize transactions with our customers and the joint venture with IBM is a step in that direction. We are also digitizing the way we operate the ships, the cranes, and the containers. Also, we do hope that we will be able to create new businesses out of all of the data that we own.
Just two to three years down the line we would like to make global container shipping as easy to do for our customers as it is for all consumers today in ordering an airline ticket. We think there is plenty of opportunity for improvement of the customer experience in container shipping. Longer term, there are some problems and issues that we haven’t solved in our industry in terms of visibility, in terms of asset productivity. We believe that digitizing or connecting our assets will be able to help us some.