[110618.EN.BIZ] CMA CGM Strengthens Ties With Singapore's PSA in Hunt For Startups

FRENCH shipping giant CMA CGM has increased its presence in Singapore by linking its venture capital arm with that of PSA's in a joint effort to find startups that will bring strategic value to each group and advance digitalisation in the container shipping supply chain.

The ocean carrier's Ze Box venture capital unit has signed a memorandum of understanding (MoU) with PSA unboXed, the external innovation and corporate venture capital arm of Singapore's PSA International. It adds to the commercial partnership the two share in the city through the CMA CGM-PSA Lion Terminal joint venture. With four berths, the terminal has a total operating capacity of 4 million TEU.

Chairman and CEO of the CMA CGM Group, Rodolphe Saade, said: "Through this collaboration, we will mentor startups and offer them access to key knowledge and expertise, so that they are well-placed to succeed. This partnership will accelerate our digital strategy to achieve better customer experience and operational efficiency."

In an increasingly competitive and commoditised industry, this startup seeking partnership is part of a wider strategic shift by terminal operators and ocean carriers towards increasing their value proposition by extending their reach deeper into the supply chain and beyond merely handling or transporting containers, reports IHS Media.

Group chief executive officer of PSA International, Tan Chong Meng said logistics was a team sport, and PSA and CMA CGM had different but complementary strengths in the global supply chain.

"This technological collaboration will add depth and diversity to our respective innovation efforts, as we seek to co-create meaningful and impactful solutions in the face of technological disruptions and changing customer needs," he said.

Under the MoU, Ze Box and PSA unboXed will support the growth of each other's ecosystem and corporate innovation programmes to address industry problems, CMA CGM said in a statement. Both companies will use their experience in shipping and supply chain management to test-bed ideas in search of better customer experience and operational efficiency.

Given the continued oversupply in the container shipping market, product differentiation is key to breaking away from commodity-level returns, according to Steve Saxon, partner at McKinsey & Company Shanghai.

"One way to differentiate the product is to integrate deeper into the landside. Being able to provide priority terminal handling, seamless visibility as it moves onto rail and trucks does meet customers' needs, and lead to a higher willingness to pay," he said. "We would expect therefore to see more partnerships, or even vertical integration, between liners and terminals, and liners and logistics companies."

Source : HKSG.