Europe needs to incentivise green pioneers, Maersk boss says

Europe’s pioneers in green technology face a first-mover “disadvantage” that needs to be eliminated for the continent to compete with China and the US, a leading European industrialist has said.

Vincent Clerc, chief executive of Danish container shipping giant AP Møller-Maersk, told the Financial Times that both Beijing and Washington offered subsidies to ensure companies had no incentive to wait on the “highly complex” move of polluting industries cutting emissions.

In Europe, however, the incentive was to “try and wait”, Clerc said in an interview with the Financial Times.

“Some of the first movers have had first-mover disadvantage,” Clerc said of Europe. “That is very concerning for me. The regulatory framework is so important because it can really shorten this period . . . We’ve seen this in the US, in China.”

Europe should offer similar incentives to those in China and the US, he added.

Clerc’s comments carry weight as Maersk operates the world’s second-largest container shipping line by capacity and is widely regarded as a bellwether of global trade.

They come in the same month as a report by ex-European Central Bank president Mario Draghi urged the continent to become more competitive or risk “slow agony”.

Among European green pioneers, wind farm developer Ørsted and battery maker Northvolt have struggled in recent months. Ørsted in August scrapped plans for a flagship green-fuels plant while Northvolt has fallen further behind Asian rivals on producing cells at scale.

Clerc acknowledged that a company as global as Maersk could afford to be agnostic about Europe’s approach as long as there was global economic growth.

But he said that the Danish group — which transports one in five containers on the sea — wanted to see Europe succeed. It was presently “slowly losing out”, however.

He said: “We would like to have Europe as a place where we continue to source talent, innovation, where we continue to sharpen our competitive edge, rather than to have to go and do it abroad and see Europe become a museum.”

US President Joe Biden’s Inflation Reduction Act offered $370bn of subsidies for green technologies while experts say China has offered its industry even more. European companies complain that the EU has mostly introduced regulations and red tape rather than incentives.

Clerc called for the EU to complete its single market, including in the financial sector. That would allow European companies to benefit from the “scale” of a large home market just as Chinese and American groups did.

He added that the EU had so far created “a lot of regulations” on the green transition but “not necessarily created the incentives” to build “champions”.

Container shipping groups have put forward their own plan ahead of a crunch meeting of the International Maritime Organization this month to decarbonise their sector, which is responsible for about 3 per cent of global emissions.

They are pushing what they call a “green balance mechanism”, which would try to make the costs of expensive renewable fuels competitive with those for conventional, hydrocarbon “bunker” fuel for ships.

“If accepted, it can put Europe in the game,” Clerc said of the proposed mechanism. “It would be quite a disappointment if we couldn’t get a framework that gets the job done when we have a willing sector.”

Maersk has led the container shipping industry in ordering new vessels capable of using green fuels that can also run on existing bunker. Its first such craft were designed to run on green methanol. But more recently ordered vessels will be powered by liquefied natural gas or bio-LNG, to the dismay of some environmental groups.

“It is a very complex process which requires mobilisation of a lot of capital, a lot of stakeholders, a lot of investments,” Clerc said of the transition to low-carbon shipping. “No single player is big enough to say that I can solve this alone. There needs to be an alignment of incentives.”

The Maersk boss also warned that shipping lines were likely to have to continue diverting most sailings between Asia and Europe round the Cape of Good Hope into next year.

Most container lines have been using the longer routes since attacks on ships by Yemen’s Houthi rebels in late 2023 prompted them to abandon the normal route via the Red Sea and Suez Canal.

The diversions have driven up the rates earned by shipping lines. But the longer routes add up to two weeks to journey times for customers awaiting goods and have generated substantial congestion at many ports.

“The reality is that if nothing happens, we will have to go for the longer routes,” Clerc said of plans for next year. “This is at a standstill. It just illustrates that it is a world that is more and more volatile, and it is a world that is more subject to disruption.”

The next serious cause of congestion for the sector might be “to do with labour”, he added. The main dockers’ union on the US east and Gulf coasts has said it will go out on strike from October 1 if it fails to reach a deal with employers on a new labour contract.

Clerc also addressed issues about the “low level of quality” being offered to shippers by container lines. Service punctuality across the industry has been poor in recent years.

Maersk in January announced that from the end of January 2025 it would end its alliance with Switzerland’s Mediterranean Shipping Company, the world’s biggest container line. The move was widely attributed to Maersk’s unhappiness with MSC’s poor punctuality.

Clerc said that he was “obviously very concerned” about poor quality.

However, he expressed hope that an alliance with Germany’s Hapag-Lloyd, starting from February, would address the concerns.

Some analysts have said that MSC is trying to “kill Maersk” with its aggressive expansion strategy, which in 2022 took it past Maersk as the world’s largest container line by fleet size.

However, Clerc insisted he did not feel “threatened” by MSC.

“MSC is executing their strategy, and we’re executing ours,” Clerc said. “If they’re trying to kill us, it’s not something we notice. It is a very fast changing and dynamic world, and I think there are different paths to success.”