Earlier this month a 2,400-TEU ship belonging to Mediterranean Shipping Company (MSC) dropped off 400 empty containers at Port of Saint John to launch the previously announced bi-weekly container service from the New Brunswick city in May.
It’s that kind of commitment that MSC Canada president Sokat Shaikh points to when talking about his company’s vision of becoming Canada’s preferred carrier. And it’s not every carrier that can make that kind of decision locally.
“As an organization, MSC is globally decentralized in many ways. For the local agencies and the countries that we operate in, the owners have made it a point to allow us as agents on their behalf, to take decisions, to have the flexibility to adapt ourselves to the local market conditions.
“What we want to do is obviously show our commitment to Canada, to invest in Canada even if it means that we need to have a two-tiered approach in creating that awareness. The first being your commercial sales strategy and direct customer contact. That’s one end of it and that’s what I believe most carriers are banking on to sell their brand.”
Shaikh believes there is a branding element to shipping lines within Canada which most shipping companies don’t have. And if MSC’s commitment to Canada exists, it’s due to “the second tiered approach aimed at local industry, local levels of government and local trade boards to understand who we are from more of a macro level” to establish a good brand message in the market.
“We’re not there yet, but this (new service) would be a focal point to let the market know that MSC is creating that stability for Canadian businesses and freight forwarding industry with regards to their planning for the future.”
MSC Canada is very conscious of what Canadian businesses need and what it has to do to accommodate it and that it has to be independent of any other part of the world, said Shaikh.
The company was welcomed with open arms when it began operations in Montreal in 2001, he said. It saw a lot of commitment and a lot of growth with its partners since then to the point where it now is the majority stakeholder in Port of Montreal, he added. During that time, its customers kept asking for other options in different parts of Canada and that’s when MSC saw an opportunity to use its global network to begin service in Vancouver.
The planning for growth beyond its operations in Montreal, Vancouver and Toronto, was not established 10 years ago. Rather, it was progressive and reactive based on its customers’ needs.
“As we progressed, all these needs started to add up and became a larger entity. And during the last three or four years, we came up with a plan and we need to ensure it’s sustainable.”
With close to 500 vessels in its fleet with 2.3 million TEUs of capacity, over 340 ports of call and 43 company-owned terminals worldwide, MSC provides the stability, support and planning for some of the largest international shippers in the world.
Over the course of time in local markets, including Canada, where 230 MSC ships called on last year, or roughly four to five vessels a week, the forwarding community and medium-sized businesses are starting to recognize that as they grow, they also need that element of stability instead of calling different carriers for different requirements, said Shaikh.
Which brings us back to Saint John and its growth potential for MSC. Was it a risk to take the plunge?
“Like anything in history, whether it is in Canada or on a global level, a business or a family, someone has to take the plunge. We’re taking these leaps of faith, not on excessive analysis, but on a good understanding of the industry and the market. We’re also relying on local stakeholders to see what we are doing and hopefully they’ll say, ‘You know what? We’re going to support them.’
“We understand there is an opportunity that will require work on everyone’s part and, yes, we’re taking a risk and the financial burden of that decision, but I think it will be a good thing if it works.”
Unlike Montreal, Vancouver or Halifax, which attract international carriers, Saint John has not had international service (with the exception of Tropical Shipping) and all inbound and outbound shipping for the area is done through other provinces or other U.S. states at a higher cost to the local consumer.
There is an appreciation now in New Brunswick that they have opportunities where none existed before, such as industries that wanted to sell internationally and not just locally, but could not, due to shipping costs.
As for where MSC expects business to come from, Shaikh is not concerned, noting that about 90 per cent of what all Canadians consume has to be imported by air, rail, truck or ship.
And what New Brunswick imports comes through Halifax, Boston, New York or Montreal and railed or trucked into the province.
“Our market is everything that moves into or out of the province and we want to change the supply chain model.”
And many companies can now take advantage of shipping through Saint John, as a result of the extended global reach of MSC, including the forestry and peat-moss industries. As well, a lot of the local waste products collected in blue boxes end up being shipped offshore for recycling.
“American Iron & Metal is a very large company in Quebec. They just bought a huge shredder in New Brunswick located right at the port and they are looking to contract both voyages and maybe we could look at that. There are many, many opportunities. There were carriers that left for many reasons, but we see opportunity.”
The company also sees opportunities that don’t exist in Montreal due to the Bay of Fundy’s high tides, on which MSC plans to capitalize by topping off their vessels from Montreal in Saint John before heading to the Caribbean. And if Saint John eventually becomes large enough, it could have its own dedicated service, said Shaikh.
Turning to another topic, Shaikh questioned why 90 per cent of the fresh produce in Canadian supermarkets is landed at U.S. ports and brought in from massive distribution centres in the U.S. Shaikh is convinced things would be different if Canada had its own major distribution centres near major ports.
He wants to change that through his involvement with the Montreal Metropolitan Logistics and Transportation Cluster led by Sylvie Vachon, President and Chief Executive Officer of Montreal Port Authority which would bring together all players in the logistics and transportation sector in the Greater Montreal region.
“When my competition is out there pushing a lane and taking cargo from a forwarder and moving it via a U.S. port, who loses? Had all of those boxes moved via Montreal, we probably would have employed more labour, more trucks on the road moving that cargo and MSC might invest X millions of dollars in the terminals that we have and so on. There’s a spin-off to it.
“This is where MSC has done something different. We’ve gone into markets that conventionally never come into Canadian ports. We are servicing the Latin American market, the South African market, the Australia and New Zealand markets. All these markets historically were always serviced by U.S. ports. And we’ve changed that partially, because our competitors are all loading via U.S. ports while we changed to a Canadian port. We’re trying to create that awareness and to create that branding whereby we want to let the market know that we’re here to grow.”
And unlike most carriers in Vancouver, MSC is not servicing the trans-Pacific trade at all. Their service is literally going down the West coast through the Panama Canal to the Mediterranean.
“We are not focusing on one specific lane. We are letting our clients know that they have the ability and flexibility to load anywhere in the world.”
But like everyone else, MSC was hit hard by the recession and is “not even close” to returning to pre-recession business levels, while bunker costs “have gone through the roof”.
While the entire industry is struggling, MSC is fortunate because its costs are not as high as some of its competitors, according to Shaikh.
“We have 35,000 employees worldwide (including some 160 in Canada) and there are carriers that are substantially smaller than us that employ more people than we do.” The 36-year-old Shaikh is a native Montrealer and a graduate of Concordia University with a degree in marketing and international business, pretty much where his career is now. He worked at Hapag-Lloyd for three and a half years in customer service and operations and logistics before moving to MSC where he has been for the past eleven years, the last three as President.
In 2008, Geneva head office “decided to take a chance with me from an age standpoint … and went with someone local who understands the local market. Pretty much everything MSC does is take a chance.” Like opening an office in Saint John.