5.12.2022 09:00:00 //
Jukka Nortio

Container traffic is Finland's umbilical cord

Sea transport accounts for 90 per cent of Finland's exports and imports. Their continuity depends on our well-being.

Mikael Ruhala, who heads the Finnish, Baltic and Belarusian operations of CMA CGM a global player in sea, land, air and logistics solutions, entered the industry by chance: his father's friend had a car dealership and his godfather had a liner agency. Ruhala ended up with the latter in 1988.

He later gained experience, for example, at Viktor Ek as a sales manager in the liner shipping department and at the Hamburg Süd shipping company as the head of operations in Finland and then in Northern Europe. The transfer to CMA CGM took place in July 2022.

The company has a fleet of more than 580 vessels serving more than 420 ports around the world providing both deep sea transit and intra-European multimodal transport. The customers of import traffic are, in particular, central retailers and, in exports, the giants of the forest and metal industries.

Shock and leveling off

After the coronavirus pandemic, there has been a shortage of containers and logistics problems caused by the coronavirus lockdowns in China, but maritime logistics are now in the stabilisation phase.

– The coronavirus caused a spike in demand in Europe and the United States. Transport cycles changed at a rapid pace and this caused a shortage of containers in the Far East. There were serious disruptions in the transport pipeline: the ships and terminals were full, and the shortage of truckers caused its own problems, Ruhala recalls, talking about the last couple of years.

As the coronavirus has eased, consumer demand has shifted to services. At the same time, the rise in inflation has weakened the purchasing power of consumers. The flow of goods has slowed down, the shortage of containers has eased and the demand for sea freight has subsided.

– Import demand has slowed down towards the end of the year, but the situation is better in exports. This year's traffic volume is 10 % lower than last year.

Lessons learned from the coronavirus pandemic for the future

The spike in demand caused by the coronavirus and the shortage of containers have taught logistics operators a lesson.

– We need to improve the planning of logistics chains. On the other hand, such a big and surprising shock is so unpredictable that you can't really prepare for it.

The past nearly three years have shown the vulnerabilities of logistics and how interdependent the global economy is.

– We can improve our responsiveness to unexpected situations. During this time, we have gathered experiences and best practices that we can apply in similar situations in the future. This is the design work we are currently doing.

When the world has seen major upheavals in recent years, how has it affected the risk management of shipping companies?

– We reduce risks by bringing together operators in the industry and improving the visibility of the entire logistics chain.

Russia's invasion of Ukraine has clearly affected the maritime logistics of the Baltic Sea. There are clearly fewer feeder vessels in our local waters, because international shipping companies no longer visit St. Petersburg.

– St. Petersburg is a major port. Now this volume has been removed. 

The situation is compensated for in two ways: routes are driven by small ships, but at the old density, or by larger ships less frequently.

– Together with our customers, we must continue to keep Finland interesting. We can achieve this by ensuring that the products of our industry are competitive and of high quality. They are in good demand around the world, so our customers can guarantee long-term cooperation relationships that are of interest to shipping companies.

In addition to risk management, sustainability issues have also risen to an important role on the shipping companies' agenda.

– Our customers require measures to respond to climate change. The transition to renewables is one of our most important actions. In September, we established a EUR

1.5 billion Fund for Energies to accelerate decarbonisation across shipping, inland and logistics operations globally.

CMA CGM already deployed 32 “e-methane ready” dual-fuel containerships which are currently LNG-powered, and will have a fleet of 77 such vessels by the end of 2026.

The next step for the industry is to develop the use of alternative fuels sur as e-methane, methanol and ammonia.

Digital advances inexorably in ports

As European companies move their supply chains closer and production moves from the Far East to Europe, it means more traffic for European ports. This creates challenges, as few European ports are capable of handling the same volumes of goods as china's major ports.

Ruhala sees the situation in Finnish ports as bright.

– The digitalisation of Finnish ports and entire supply chains is developing rapidly in such a way that the information entered by one party is immediately available to all parties in the chain. For example, the Port of Helsinki has excellent visibility into its own traffic. The systems are already in place. Now it is important that we get all parties to use the systems, says Ruhala.

According to Ruhala, the extensive digitalisation of maritime logistics is a strong trend with clear reasons. From the beginning of the 1990s to the beginning of the financial crisis, the business of container shipping companies grew by 10-15% per year as a result of increasing the size of ships and lowering unit costs. That road is now s exhausted.

– The industry forgot about digitalisation when there was growth in other ways as well. At the end of the last decade, this changed with growth of only a few percent per year. Digitalisation is now driving efficiency in all operations.