PSA leveraging forwarder acquisition to serve shippers directly

The idea of a major global marine terminal operator not expanding its reach beyond its truck gates and docks seems almost trite. Yet, PSA International's leveraging of its acquisition of a non-asset-based global logistics provider gives the remit of the largest marine terminal operator by volume a new wrinkle that reflects changing globalization.

Through the acquisition of BDP International, completed April 2022, PSA sees an opportunity to offer shippers a greater degree of control of their goods amid elevated geopolitical uncertainty and regulatory restrictions. Shippers also want more routing and modal options to reduce the quantifiable carbon emissions PSA BDP are working to better calculate, Ghim Siew Ho, CEO of products at the newly merged company, told the Journal of Commerce in mid-April.

The major global marine terminals, in their own ways, are taking greater control of operations outside their traditional remit. Through its end-to-end integrator strategy announced in 2016, Maersk leverages APM Terminals to slow or speed up the flow of cargo as some of its customers desire, and ruffled some forwarders in its strategy.

DP World has reached back on the landside to create logistics parks across its network. On the waterside, DP World took control of intra-Europe carriers P&O Ferries and Unifeeder in 2006 and 2018, respectively, and then Feedertech, an operator of feeder and shortsea services in Europe, the Middle East, and Asia, in 2019.

Last year, Dubai-based Abu Dhabi Ports Group took an 80 percent stake in Global Feeder Service, which operates one of the world's largest feeder networks.

Even the smaller global marine terminal operators offer far more than container loading and unloading. Yildirim Group, for example, offers forwarding and logistics between its home country of Turkey and 40 others. DP World in 2021 launched its digital forwarding arm, and in tandem, pushed out its trade finance platform.

But the scale of the forwarding capabilities PSA is leveraging parallels only Maersk in end-to-end ambition in container shipping. BDP brings contract logistics, air cargo, and container slot capacity as a non-vessel-operating common carrier operating in 39 countries. That reach allows PSA BDP to offer shippers more routing options through rail-connected marine terminals and inland hubs, avoiding truck haulage, said Mike Andaloro, CEO of PSA BDP.

There are more than just routes with a smaller environmental footprint. PSA BDP sees opportunity in offering ways for shippers to shrink Scope 3 emissions in the various links of the supply chain. Those ways include trucks powered by alternative fuels, electrified marine terminals, and slots on container ships powered by liquefied natural gas (LNG) and possibly methanol.

"If you look at what's happening in the maritime space, transit times are actually shortening because there's less and less port congestion. Inventory levels are still high," Andaloro told the Journal of Commerce. "We can recommend alternative means of transporting the goods that are both sustainable, as well as lower-cost." He added the company has barge capabilities, specifically in Southeast Asia, and cargo can be held between origin and destination as the cargo owner makes sales or reroutes containers.

Pulling the digital thread

Critical to this integrated offering is managing the digital thread of customs and sanctions compliance that, when it becomes tangled, will bring cargo movement to a halt. The customs brokerage services of BDP, whose shipper customers hail from the chemical, pharmaceutical, automotive, and other high-value industries, complement PSA's own digital investments, Andaloro said.

Maersk has also invested heavily in smoothing out customs kinks, acquiring New Jersey-based customs broker Vandegrift in 2019 and KGH Customs Services, a Sweden-based customs and trade management company, in 2020. DP World in January 2022 launched a single-window platform for cross-border trade.

PSA's journey to serving shippers directly accelerated in 2018 with the acquisition of a majority stake in CrimsonLogic and the folding of its supply chain activities into an arm focused on cargo solutions that is now under BDP International. The latter launched a tool, known as Smart Classify, last year that helps shippers ensure they are trade compliant.

"PSA had developed these capabilities, but [it] didn't have a lot of direct customers then because its main customer base were the carriers," said Andaloro. Now, PSA BDP can promote enhanced offerings directly to cargo owners.

The extent to which shippers embrace such solutions will speak to more than the execution of meshing non-asset logistics with the largest global marine terminal network. It also hinges on the forces PSA BDP says requires such a bold new approach: production returning closer to consumption; digital technology giving shippers a significant edge in controlling inventory; increased geopolitical risk, regulation, and sanctions; and Scope 3 emissions requirements forcing firms to lower their carbon footprints.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.