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Incubator arms of CMA CGM and PSA join hands to drive innovation

Singapore

THE corporate venture arms of French shipping giant CMA CGM and port operator PSA International are teaming up to drive digitalisation and innovation in the shipping and supply-chain ecosystem.

On Tuesday, the two units responsible for incubating start-ups, CMA CGM Ze Box and PSA unboXed signed a memorandum of understanding (MoU) detailing collaboration between them on this front.

One objective of the MoU is to leverage the complementary exposure and capabilities of CMA CGM in international shipping and PSA in port operations and management, to test-bed ideas and achieve better customer experience and operational efficiency.

This MoU comes five months after CMA CGM's announcement in January of the creation of Ze Box, the shipping line's first international startup incubator.

CMA CGM's chairman and CEO Rodolphe Saade told The Business Times that the shipping giant is committing US$10 million a year to this startup incubator.

The setting up of Ze Box came at a juncture when the shipping industry is "changing and being impacted by digitalisation", he said. CMA CGM has been looking to tap startups to develop digital tools that will improve customer experience.

CMA CGM has already identified five startups now based in Europe, the Middle East and Africa, to join its incubator from this summer. As a shipping group with a global footprint however, CMA CGM needs to "stay international", and this applies to Ze Box and the startups it plans to incubate.

Mr Saade viewed Tuesday's MoU as precisely the avenue for CMA CGM and Ze Box to keep tabs on what is happening in Asia, the region deemed as the biggest driver for global trade.

PSA International would, likewise, stand to enlarge the reach of its incubator of programme. Its group CEO Tan Chong Meng views logistics as a team sport, and Tuesday's MoU as a bringing together of two partners with "different and yet complementary strengths in the global supply chain".

He acknowledged that shipping companies and port operators are active in what is fundamentally a business-to-business environment, so their calls to action tend not to interest as many startups.

However, he believes that the MoU will open up a window for both PSA and CMA CGM to draw more entrepreneurs into the fray, as any joint call from the two parties would translate into an enlarged playing field for participating startups.

He added that the two parties can explore "cross-sponsorships" for startups enrolled under the two incubator programmes.

PSA established its incubator programme in 2016, with an initial fund size of S$20 million. To date, the port operator has incubated around half a dozen startups. Three of these, ClearMetal, Haulio and Deliveree, have already exited in stealth mode and raised seed funding for their next stage of growth.

Clearmetal offers a cloud platform to predict global trade. Haulio extends a web portal that allows users, typically customers needing to move containers, to secure trucks and truck drivers. Deliveree uses a marketplace model to tackle what it deems as "first and mid mile" logistical challenges of moving cargo and bulk goods.

These startups are either active in South-east Asia or have been operating out of the US. PSA International is understood to be looking at bringing another Hong Kong-based start-up on board its incubator programme.

Observers generally applauded the tie-up between PSA and CMA CGM though some raised lingering concerns over the industry's perceived progress or lack of, with digitalisation and innovation.

Ocean Shipping Consultants' Jason Chiang said: "CMA CGM-PSA are creating environments for start-ups to take root in the sector. They are seeking ideas from people who are not in the sector that can deliver the quantum leap, rather than incremental benefits for shipping clients."

But he pointed out that the challenge to be tackled is to develop apps that "everyone needs but probably does not realise they do so at the moment".

Alphaliner executive consultant, Tan Hua Joo noted that unlike for consumer products, "transformational changes are more difficult to effect in container shipping because it is fundamentally still a B-to-B industry".

He added that the irony is that despite criticisms from its detractors, the container shipping market has worked well.

"So while new technology would make the market more efficient, it will not fundamentally transform the container shipping landscape."