IMO 2023: Lack of awareness along supply chain about its impact?

The stakeholders of the shipping and logistics industry in India raised a collective alarm on IMO (International Maritime Organisation) 2023 and the impact it can have on the entire supply chain from the increase in the cost of shipping to slower ships and from capacity reduction to investment needs and from fear of carbon taxes to technology requirements.

They were speaking at a panel discussion on "IMO 2023: How to prepare for the coming changes and the need to know more" at the two-day Cold Chain Unbroken 2022 conference and exhibition at Hyderabad on Sept 15 & 16, 2022, initiated by the new-age digital freight forwarding company WIZ Freight.

While IMO 2020 was for the reduction of sulphur in maritime fuel, IMO 2023 is the attempt to further reduce carbon emissions by ocean shipping, coming into force on January 1, 2023, by adopting the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII) rating scheme.

IMO's Greenhouse Gas (GHG) Strategy plans to reduce the carbon emissions of the global shipping industry by 40 percent by 2030, and by 70 percent by 2050 compared with a 2008 baseline level.

One option that the shipping companies have, to comply with the regulations, is slowing down the ships and it is a very likely scenario as the biofuels are expensive and less in supply. However, this would also mean a reduction of available capacity or an increase in the need for more ships or the freight rate going up for an already disturbed supply chain.

BVR Vijaya Bhaskar, Associate Vice President SCM, Pfizer Healthcare India, thanked the supply chain fraternity for its handling of IMO 2020 as the impact didn't affect their customers. But he feels that IMO 2023 is going to be more stringent and there are not enough discussions among organisations to tackle the same. He also raised his concerns about the questions that have in his mind including what the impacts are going to be on lead times, inventory management, and costs transferred to customers.

Jayaram Radhakrishnan, CEO & Executive Director, M+R Logistics India, the Indian operations of the Swiss company recently acquired by WIZ Freight in August 2022, also noted that the awareness about the repercussions among freight forwarders is nil and he understood it while preparing for the discussion.

Meanwhile, Jebakumar A, Area General Manager – Western & Central India – CMA CGM, said that the subject is also new for them. However, he pointed out the rate with which the group is moving towards carbon neutrality which it plans to achieve by 2050, much ahead of the IMO plan.

He also informed that CMA CGM is investing heavily into innovations and startups to achieve the targets set both in-house and that of IMO.

He also noted how CMA CGM is raising awareness in India about the upcoming IMO 2023 and its implications by organising events including one with FIEO (Federation of Indian Export Organisations) a few weeks back and another in Mumbai in November 2022.

Jebakumar also confirmed the potential need for more vessels, the investment it needs, and the running cost it will have with the alternate fuels.

Amar Mascarenhas, Director of Operations, WIZ Bulk, encouraged the stakeholders to instead look into the long-term evolution of the supply chain. While he agrees that there is a cost attached to compliance, he notes that it is the price of saving the planet.

However, he pointed out that the cost attached will get reduced with technological improvements.

Earlier, Jayesh Ranjan, Principal Secretary Industries & Commerce, and Information Technology, Government of Telangana revealed the next generation 1500x pharma container of SkyCell, the manufacturer of temperature-controlled hybrid containers, for the first time in India. Ranjan while inaugurating the event also asked the stakeholders to prepare a white paper on the cold chain needs of India.

On the sidelines, WIZ Freight also flagged off its fleet of temperature-controlled trucks.

Indian airport infra
Transhipment and growth of airports i7n tier 2 and 3 cities to drive airport infrastructure developments in India was the subject of another business discussion at the event. The cold chain requirements of these airports and functions would closely affect the future of Indian air cargo.

Satish Lakkaraju, Global Head of Air Freight & Pharma Vertical – WIZ Freight, who moderated the session on airport infrastructure noted how airports in tier 2 and 3 are now growing and attracting more cargo even from the airports in tier 1 cities due to the presence of manufacturing clusters close to it.

Ramesh Mamidala, Chief Cargo Officer (CCDO-Airports), Adani Airports noted that the airports in cities like Guwahati and Lucknow are showing immense potential for cargo and soon have integrated cold chain facilities in both airports.

"We are investing Rs 2000 crore into the five smaller airports in the next few years," he said.

He also informed that there is an upcoming pharma logistics centre at Sardar Vallabhbhai Patel International Airport, Ahmedabad.

Worldwide Flight Services (WFS) recently announced its entry into the Indian market when Bangalore International Airport (BIAL) awarded a 15-year license to operate its first cargo handling operation in India at Kempegowda International Airport, Bengaluru (BLR Airport).

Mohammed Esa, Sr. VP – Group Commercial B D & Strategy, WFS, noted that one of the things that excite him about Bangalore and India is the potential for cold chain movement of goods from the country and particularly the volume of pharmaceuticals.

"BLR Airport is just our first step towards expanding in India. We want to go to the airports in Tier 2 and 3 cities in India," he said.