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PSA shifting from port operator to supply chain solutions provider

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Tan Chong Meng, CEO of PSA International speaking during TOC Asia webinar
The decision by terminal operator PSA International to expand into the end-to-end logistics supply chain space has been underscored by the disruption caused by the Covid-19 pandemic.

Speaking at a TOC Asia webinar as part of Singapore Maritime Week Tan Chong Meng, CEO of PSA International, explained how a few years ago with the Industrial Revolution 4.0 disrupting traditional industries and manufacturing the Singapore-headquartered company decided it needed to look beyond its traditional role as a terminal operator.

“Within our industry we saw players, who are within the logistics space, actually acquiring cross sector businesses as well. We took that as opportunity to reflect on our role as port operator and we realised we could not stay a port operator, but we also have the ability to look beyond our own boundaries and play a larger role within ecosystem of the end-to-end supply chain,” Tan explained.

“We felt logistics was a three-dimensional challenge. A lot of times we are focused on the physical flow, but we must not forget the regulatory flow and the financial flows. It’s only when these three flows move freely that we have a fully functioning supply chain.”

To tackle this three-dimensional challenge PSA introduced a new business called Calista.  

In 2019 PSA also formed Cargo Solutions to help its customers in a business that now not only dealt with the land-sea interface at ports but also encompassed inland locations such as container depots. Inland facilities now make up half of PSA’s business locations globally.

“To serve our customers better we formed this unit called Cargo Solutions to focus on regulatory enablement, to focus on intermodal seamlessness, and also on digital efficiency,” Tan said.

The new business focused on four key verticals where PSA saw challenges or painpoints that needed solutions - chemicals, advanced manufacturing, e-commerce and cold chain.

Amidst all these changes to PSA’s business along came the Covid-19 pandemic in 2020, which he described as “a rude shock”. The pandemic resulted in supply chain disruptions and wave of buying by consumers that Tan described as “lockdown induced”.

“As supply chains were stretched containers were not getting back to manufacturers to be filled and loaded and ships were spending more time in ports. Even though we have not gotten over this the situation with the Ever Given totally surprised us and added to the complexity,” he stated.

With this disruption demands from shippers and customers have grown for a supply chain that not merely works but is also sustainable. This is against the background of an environment where the only certainty has become uncertainty.

From a PSA perspective Tan said they decided rather than dwelling on uncertainties to position the business to address certainties that it could see.

PSA sees four key certainties ahead

  • There’s already a clear trend towards resilience, not just-in-time, but also just-in-case
  • Customer behaviours change and it’s indelible and watershed
  • Digitalisation will continue to accelerate
  • Sustainability becomes key

Tan said these key certainties, “led us to be further motivated and be convinced that our move beyond ports and going into solutions has been the right one”.

TAGS: Asia