COSCO partners with Tesla to digitally transform logistics services

Cosco vessel

Cosco Shipping Aries vessel unloading in Hamburg, Germany (Photo: Reuters)

China's state-owned transportation conglomerate COSCO Group has partnered with Tesla to realize digital transformation. With this project, the leading container shipping company hopes to help solve the problems that international logistics have been affected by during the pandemic.

For this project, COSCO will share its shipping data with Tesla so that the electric vehicle pioneer can pilot the system at the port of Shanghai.

Ports and logistics networks have lost their effectiveness since the second half of 2020 as governments began to adopt and tighten measures to prevent the spread of the coronavirus, Xu Lirong told Nikkei. Mr. Xu is currently the chairman of COSCO Shipping Holdings.

Mr. Xu said that when logistics services faced difficulties, the cost of transporting goods by sea had increased, noting that the lack of containers was also the cause of the increase in costs.

The corporation's streamlining efforts are accelerating. “We will promote the digitization of shipping," Xu said. "We have established a system to exchange shipping data in real-time, using blockchain technology."

The system was supplied to Tesla, for use on a test basis at a port in Shanghai. Mr. Xu said that Elon Musk's company can accept shipments without their employees having to touch documents and other documents.

The system "takes care of important functions, such as paperless work, amid the coronavirus crisis," he said.

COSCO Group was established in 2016 by the merger of the two largest state-owned shipping companies in China. By the end of 2020, the group owns the third largest container fleet in the world.

COSCO Shipping, a listed company, contributes about 50% of the group's revenue, reaching a net profit of 9.9 billion yuan ($1.55 billion) in 2020, up 47% year-on-year, with revenue growing 13% to 171.2 billion yuan, making it an all-time high in both categories.

The increased shipping capacity has helped the group avoid the severe negative effects of the pandemic.

With distribution becoming difficult, Mr. Xu said, "we have done our utmost to stabilize logistics networks by proactively increasing the number of containers to raise our shipping capacity."

The group's shipping volume reached 1.34 billion tonnes in 2020, he said, up 2.5% year-on-year.

The Asian market is crucial to COSCO's further growth, and the group is betting on the southern Chinese island of Hainan to help it tap the region. After acquiring Hainan Harbor and Shipping Holding in 2019 and by the end of 2020, the group has opened 30 new routes connecting the island with domestic and foreign ports, Xu said. So the island "has taken a step forward to become a hub of maritime transportation between China and the Association of Southeast Asian Nations," he said.

The group invests in and manages overseas ports in line with the Chinese government's Belt and Road Initiative, a global infrastructure development strategy. President Xi Jinping has declared his intention for China to become a "true maritime power."

COSCO Group visits more than 1,500 ports in 160 countries, Xu said. The Greek port of Piraeus, which the group invests in, has become the largest hub port in the Mediterranean and is seen as a "model" Belt and Road project, Xu said.

The pandemic has dealt a blow to the global supply chain and severely affected the shipping industry, Xu said. But "global trade as a whole is expected to move toward recovery in 2021 as the spread of vaccinations improve the infection status," he added.

The Group also needs to establish favorable relationships with overseas governments and companies while at the same time complying with Chinese government policy, this balancing act becomes more difficult as China- The United States is worse.

Read more: