Boston Consulting’s Sanders says carriers investing more in supply chain

The COVID crisis and import surge into the United States has increased ocean carrier revenues and resulted in some companies investing in supply chain operations that will allow them to “get closer to their customers,” says Ulrik Sanders, managing director and senior partner, The Boston Consulting Group, Copenhagen.

Sanders was speaking at the Trans-Pacific Maritime conference in Long Beach.

In an interview with AJOT, Sanders said that the investment by carriers in supply chain businesses “is not new”, however, the increase in revenues for ocean carriers in the last two years has accelerated the trend. These investments include terminals, rail and road freight and e-commerce and two of the leaders have been Maersk and COSCO:

Maersk operates 73 terminals with throughput of 40 million TEUs. It operates inland terminals, air cargo with Senator and Star Air, road freight with companies such as Pilot and B2C Europe. It also has investments in contract logistics with LF Logistics and investments in digital logistics and e-commerce and last mile investments with Pilot and B2C Europe and Visible.

COSCO operates 35 terminals with throughput of 106 million TEUs. It operates inland terminals, rail cargo with Logitren and Pearl as well as investments in air cargo, road freight, contract logistics operations.

Other carriers with sizeable investments:

MSC operates 54 terminals with throughput of 45 million TEUs. It has expanded into inland terminals, rail cargo with CP Rail, a “rumored” air cargo acquisition and investments in road freight, contract logistics and digital logistics.

CMA/CGM operates 27 terminals with an 11 million TEU throughput. The company has invested in inland terminals, rail cargo through Continental Rail, air cargo with CMA/CGM Air Cargo, contract logistics and freight forwarding through CEVA Logistics and has investments in digital logistics and e-commerce.

Venture capital companies are seeing the supply chain possibilities. Sanders notes: “There has been a record high venture capital deal activity as ventures aim to solve supply chain pain points.”

He says there were $34 billion in 2021 of venture capital investments in supply chain businesses up 86% from $18 billion in 2020.

Some examples:

Supply chain visibility platform Project 44 raised $420 million valuing the company at $2.2 billion.

Cloud-based-based solutions provider Assent raised $350 million valuing the company at more than $1 billion.

The result is that “the lines of the transport and eco-system logistics systems are blurring” as acquisitions by carriers move them into new territories to get closer to the BCOs.

Digitization

Sanders said there is a growing investment in digitization that has helped increase transparency as ports, shippers and carriers need to keep better track of cargoes.

This trend was recognized by John Porcari, Biden Administration Port Envoy, who told TPM attendees that data sharing between goods movement companies and ports needs to be improved. More companies and ports are sharing data which allows for better planning and projections, he said.

A sign of this growing trend is that the Port of Long Beach is creating the Supply Chain Information Highway, a digital infrastructure project “designed to liberate actionable data across supply chain nodes and organizations responsible for the movement of containers through various transportation systems. The goal is to offer a solution where authorized supply chain partners across the nation can gain secure access to data that will result in increased visibility in cargo delivery.”

Noel Hacegaba, deputy executive director, Port of Long Beach told AJOT that several U.S. ports are interested in the project and an announcement of U.S. port participants will be made soon.