Gu Yetao / 08 June 2023

Maersk North Asia Chief Representative Jens Eskelund: China and Europe will keep the dialogue going and find solutions for the challenges together

In Feb. 2023, A.P. Moller-Maersk held the groundbreaking ceremony for its first green and smart flagship logistics center in Lingang, Shanghai, which marks a new stage of Maersk’s business in China. As one of the world’s leading container shipping and logistics company, Maersk’s investment in Lingang means Shanghai plays a critical role for the company’s global network and the resilience of global supply chains.

An attractive location

The big project in Lingang will give Maersk additional 150 thousand square meters of warehousing storage capacity, and Shanghai is one of the strategic locations for Maersk to achieve the goal of becoming the global integrator of container logistics.

Jens Eskelund, North Asia Chief Representative of A.P. Moller-Maersk, emphasized the importance of Shanghai: “If you look at the figures -- a third of the world’s export come out of China, and a third of China’s export come out of the Yangtze River delta. So, we need to be in Shanghai.”

As a special area of Shanghai free trade zone, Lingang is a very attractive location for Maersk, because “it is in close proximity to the world’s largest port and the world’s largest single manufacturing area”.

Shanghai’s center is also featured as green and sustainable. “Now we have ability and opportunity to introduce some of the latest technologies in term of digitalization and decarbonization, which make it even more attractive,” Mr. Eskelund said.

See growing business opportunities

As Mr. Eskelund introduced, besides the flagship logistics center, Maersk has continued to invest in China, even during the pandemic. “We undertook a very significant acquisition of LF logistics in 2022. The acquisition provides us 73 warehouses in China. We have just launched a number of new air freight services connecting China with Europe and the U.S., so we are developing quite positively in China and we will be doing best to serve our customers in the country. ”

With China is relaxing COVID policies, Maersk sees growing business opportunities ahead. Mr. Eskelund said: “We are very busy in 2023, because China is opening up again. We can travel freely, and on basis of this, we expect to see of economic activities.”

Aligning decarbonization goals with China

Maersk has committed to achieving zero emissions by 2040, which is the most aggressive target for decarbonization in the industry. The company believes that China will be one of the places that can help to achieve the goal.

“We got a lot of support in China,” Mr. Eskelund said, China has its own 2030 and 2060 decarbonization goals, so basically we are aligning ourselves in terms of decarbonization goals.

Maersk also believes that China has technologies to produce green fuel and electricity, and the company has signed an MOU with Shanghai International Port Group on green methanol bunkering. “We believe China has great potential to become the leading manufacturer of green methanol fuel because China has engineering capability.” Mr. Eskelund said, “We are very looking forward to partnering in China with fuel producers and with ports like Shanghai, to get the transition to green energy. We are very hopeful and optimistic when it comes to decarbonization.”

Trade balance and consumer confidence

In 2022, China and the EU were each other’s second-largest trading partner. In Mr. Eskelund’s view, the trade between the two areas in 2023 is depending on whether Chinese consumers are back in force and whether the consumption can rebound, as well as the trade balance between China and the EU. “When we look at 2022, the Chinese export to Europe is three times larger in value terms than the import from the Europe to China,” Mr. Eskelund said.

He thinks that people need to look at what can make it to be more balanced. “I don’t think it can be completely balanced, I don’t think it is realistic. Perhaps take a look at other things structurally in the economy and in the relations, to make more balanced level of trade.”

Another factor is consumer confidence. Mr. Eskelund said: “People go out and feel confident about spending money -- that’s will be good for the import. As for export, we believe there is a high focus in China of maintaining China’s competitiveness for export manufacturing.”

However, Maersk expects that the global trade growth in 2023 will be very modest, somewhere between -2.5% to 0.5%.

Cooperate in a broader range of issues

In 2023, the development of the global logistics industry and supply chain is still facing challenges such as geopolitics. Maersk hopes some of the geopolitical tensions will be resolved. “It’s possible to find ways to engage each other, and not impact trade,” Mr. Eskelund said.

When talking about relations between Europe and China, Mr. Eskelund thinks the dialogues between China and Europe make sense, in view of the experiences of the past three years. “We are not so much talking more about decoupling, but talking about de-risking. I think most people that I talked to have realized that decoupling is not a realistic aspiration because we are dependent on each other in Europe and in China,” he said.

“In terms of trade independence, if you have supply chain issues, how you can make sure that these will not become a really big problem in your own country, how we become more resilient, how we create more flexibilities in the supply chain and how we can really make sure that if something happened in one part of the world does not have a very big impact globally.”

Mr. Eskelund personally expects that China and Europe will continue to be very important trade partners for each other. “I think so many areas, like climate change, that must be addressed with global cooperation. But I also think it will be a big loss for the world if we are not able to cooperate in a broader range of issues, including research, development on how to create more growth in both China and Europe. I’m sure the two sides will keep the dialogue going and find solutions for the challenges together.”