CONVERSATION WITH Søren Toft EN

Yeah, we can certainly talk about that. I mean, first of all it's a tragedy what's happening there. And we have of course looked after all of our people in all the different entities in the MSC group, so glad so far they're not affected, but it's a real tragedy. And in Port Sudan we see of course massive waiting times. They were there already before, but it's even further procrastinated. So this is the reality, but the port is working. How bad are the waiting times? Three to four times more? I don't know off the top of my head, but I would say three to four weeks easily. Three to four weeks waiting time, so that's significant.

Well, I mean, we are extremely happy that we can now call the AGL people our colleagues, more than 21,000 as you say. And for us it was a very important deal. MSC in the first place saw Africa as a very, very important place in the world. And basically with the acquisition of AGL we could significantly strengthen this. There were already strong bonds between two family companies. We have full commitment behind AGL for continuing to develop their footprint. And with MSC as the owner, obviously we can also increase the future commitments of continuing to invest in Africa, be it on the port side, the land side, and everywhere around. So that's really for us the main logic for doing this. We believe in Africa. We believe also in the industrialization of Africa that is going to come. So for us it was a great and very important step. But AGL will continue to operate as an independent player. They are serving the whole market, they are serving all shipping lines in many cases, and it's important that they keep that integrity and it's important that they continue to be an evaluating player, but of course with the support of MSC we can further the commitment.

Well, first of all, it's not always unfortunate that one plus one becomes two. So we had every interest in the world to make sure that we keep as much as possible. Secondly, AGL is an incredibly gifted, talented and very important entity in Africa. So for us it's very important that they kept their independence, they kept their own spirit, their own entrepreneurial experience so they can continue to evolve. That was really the main thrust. Then of course there are some things where AGL is a common user terminal operator, so they have to serve the whole market. We want to preserve that. Of course we are pushing them to become more productive, more efficient so that the port calls can go faster, not only for MSC ships but for the whole market as we industrialize. That's really the key logic. Yes, we are looking at realizing synergies where we can. That's not forbidden, it will be logical, but we have to do it in the spirit of keeping AGL as an agnostic entity.

And we can add to that additional projects on the way in Matadi, Walvis Bay, several inland projects, several warehousing projects. It's all a testament to the commitment we have and the belief we have in the continued development of Africa. Obviously we have taken on board in addition to the few concessions we had as the MSC group, we're taking on board a lot of the concessions of AGL, but we still see further opportunities. So that's really what it is. We didn't have a significant presence in Congo or DRC, but with these two moves we're now doing that. And on the back of what we did in Matadi, we are also now establishing own agencies for MSC. We were not represented there before. So it's simply part of our growth story.

I think first of all, commitment to Africa means that you have a long-term mindset. You cannot be committed to Africa if you're just looking for the next quarterly earnings. It's not going to work. So you really have to have a long-term orientation. That's first and foremost. Then of course you need to be committed like you say with funds that you're willing to invest, you're willing to look at projects that are going to be with you for 10, 20, 30, 40, 50 years. And that's really the outlook and the commitment we have to Africa. The demographic developments are undisputable. Africa in the last 20 years grew with a population the size of the EU, 600 million since 2000 to 2020, and we'll see another one billion or so grow. And if the GDP per capita doubles or triples, which is not a lot because it's coming from a very low base, obviously there'll be tremendous opportunities in this continent. And we need to make sure opportunities are coming here. We need to make sure the opportunities for employment for all of the Africans. So the solution to the issues of Africa is not happening abroad, they need to happen in Africa.

Yeah, I guess it's fair to say that the African free trade area has not really taken off in any way. At least we have not yet seen massive benefits, right? All the leaders say the right things but the actual tangible work is not really bearing fruit yet. But we'll continue to work with them. But for us, the solution is not so much in what we say but in what we do. So it's in the investments that we make, it's in the continued renewals of the concessions that we do, it's in the new projects that we have, it's the fact that we continue to expand on land. That's the commitment and the contribution we can give. We work with the AfCFTA of course we will, but it needs to be efficient, it needs to work, otherwise there's no point. Then it'll be a lot of conversation. So maybe it's a bit of a harsh way of putting it, but I think for the MSC group our contribution would be the commitment and the investments and the long-term mindedness that we have on this continent.

Well, decarbonization is a battle that we have to fix, maybe you should fix. So we have to understand that we are all, many of us are parents to kids and we want to be responsible business people. So decarbonization is part of that agenda for sure. There is no easy solution, that's the problem. Today you can easily build a ship and manufacture the engine to become green. The problem is in the availability of fuels. So all shipping lines more or less are investing in green ships, they're all dual fuel because we cannot run the risk that suddenly we can't go to the gas station and there's not the gas that we want. So we're all investing in dual fuel ships. We have different philosophies across companies and that's fine. Some believe more in one product, some believe more in another. I think what we can say with quite a bit of certainty is that because of the scarcity of the green fuels, we're going to see a multi-fuel approach. So there'll be ships running on LNG, ships running on methanol, there may be ships running on ammonia, and so on and so forth because of the availability of fuels. At MSC we have chosen a pathway on LNG. We know that fossil energy isn't the solution, but it already improves 20 percent. If you add that with biomethane you already get to 34 or 43 percent depending on who makes it. And then we'll do probably methanol and other things. So that's the real challenge: the availability of the fuel. And let me also say, we are lacking real regulation. There is no regulation in the world, there is no global price on carbon, there is no real R&D fund that could have been put under the IMO where you could put a tax on fuel and then use that money to invest in real solutions. Every single company, and this is the real problem, is trying to become the expert of the future fuel, which is a little bit of a miss, right? We're a shipping company, we're a logistics company, we're a terminal company, we're not a fuel producer. But we are forced, and we do it, to now become experts in that part too.

Yeah, so biofuel is there today but it's not there in the quantities that you can decarbonize the whole shipping. But we're offering it as a product to our clients if they want to ship more green, so to speak. But we have to remember this biofuel competes with other sectors. In fact, if you want to put it like this, it's maybe even wrong that shipping consumes biofuel because it's better used in the sky, that all the airplanes would use it from a climate impact point of view. But we're doing it because there is a demand and a growing demand from our clients.

I think for once maybe our prediction was not too bad. But we were also coming from extreme highs, you could almost argue you could only go one way and that was down. But of course we have since the middle of last year seen the effect of the inflation, the effect of the energy prices, the effect of the interest rates. And at some point when the world came out of the COVID situation, obviously a lot of the physical consumption went into services and travel and leisure. So it's almost obvious. I think probably many people in the room here also bought that extra TV they didn't need, and therefore on the back of serious physical consumption came a moment of relaxation. But I see basically that now after two or three quarters where it's been like this, we're seeing things slowly pick up. And I still expect that there will be a further slight improvement in the second half. Yeah, I would expect so on the demand side.

Next decade, two decades, there's going to be a few themes for us as a global company operating in 155 plus countries. First of all, there will always be a fire somewhere, right? That's solid, there's always a fire somewhere that you have to expect. But I think some of the key themes we're going to be faced with in the next one to two decades will certainly be the macroeconomic situation and the macro policy situation that we're seeing. We're seeing protectionism, we've seen a situation in the world in general, of course we have a terrible war in Ukraine and how that maybe affects other parts of the world. So that's going to be a big thing. But again, we cannot escape it. If there's going to be a conflict somewhere, we're going to have to deal with it. It's not like we can change the outcome of whether that conflict is going to be there. The second big theme we talked about is for sure decarbonization, because decarbonization is not something you solve with the flick of a switch. This is a one, two, three decade change. For instance, we operate today 750 plus container vessels. If tomorrow we were asked to go and scrap them and build new ones, that would be terrible for the environment. So it's a transition. And the third big theme we're going to be dealing with, that we have been and continue with, will be the whole digitization situation. Now a lot of talk is about AI and so on, but the whole shift from the more manual to more digital. I think those are going to be the main themes we as a company.

Well, I think the first answer to that is you have to have some great, good, committed, loyal people, which we do, because we can't be everywhere. But you also have to accept that whether it's in business or in sports, if you want to do at least what I do, it takes a lot of time. You can't get away with this on 40 hours. So we probably spend double and you have to be in the details to understand what's going on. You can't just see it far removed. So we make big decisions in one instance, and in another we try to deeply understand the problem in a certain part. And I think to be a good leader, to make good strategic decisions, also requires that you actually know the material and don't just surface too much on the waves. So that's a little bit what we do. But yeah, of course, how can you run a company with more than 100,000 people if you don't have great people? And does that mean also that you know what they do down to the details? So you're not just the guy who sees the big picture, but you're a small details kind of guy. I think you have to straddle both. You have to be able to move very quickly from one end of that spectrum to the other. Do I understand what everybody does in detail? No. But I guess I've spent a little bit more than 30 years in this industry, so I picked up some experience along the way. And I still try to go and put my hands into the weeds every single day, every single week. You need to understand deeply what's going on to be an effective leader and to make great decisions.

Well, with AGL now part of the family, we believe we have a great strength and a great offering to our customers in Africa. But we are far from done. We didn't acquire AGL to defend it, we acquired AGL to grow it and to continue to develop it. And that's exactly what we're intending to do. We have of course not only AGL, we have MSC, we have Medlog, we have TIL, and we have a number of other things that we would like to expand with on the continent. So AGL is a very important piece in the puzzle, a very big piece in the parliament? We covered the way that we want them to operate, but of course we want all entities in the MSC group to collaborate and ultimately deliver better productivity, better outcomes for the clients.

No, I don't think I have anything to add other than for us Africa is a very, very important part of our global business. It's not always an easy place to do business, so you have to be patient and you have to have a long-term perspective. But it's very promising, there are lots of opportunities, and there are many, many great people delivering every single day for us. So that's my key takeaway and that's why I'm spending a day and a half here, to meet a lot of interesting people and to make sure that we can further our operations here also in the next decades.