Maersk Looks to Join Supply Chain Management Big League
CEO of Danish shipping-and-oil conglomerate says aim is to become ‘global integrator of container logistics’
Trucks wait next to the Maersk Hartford cargo ship at the Port of Charleston, S.C. PHOTO: BLOOMBERG NEWS
A.P. Moller-Maersk A/S is looking for more shipping takeovers and plans to integrate its transport and logistics business to offer more supply-chain management services like United Parcel Service Inc. and FedEx Corp.
“Our aim is to become a global integrator of container logistics,” Maersk Chief Executive Soren Skou told investors on Tuesday at the group’s capital markets day gathering in Copenhagen.
In a major shake-up announced in September, the Danish shipping-and-oil conglomerate said it would split the group into two divisions focused on transport and energy. Maersk Line, its shipping unit, would oversee the transport division, while the group’s oil interests would be consolidated into the energy division that will embark on joint ventures, mergers or independent listings over the next two years.
More than half of the company’s revenue comes from Maersk Line, the world’s biggest container operator by capacity, which moves about 19% of all seaborne container cargo and is seen as a barometer of global trade.
Maersk plans to move more ships in and out of APM Terminals, its own global ports operator, and move more cargo inland through DAMCO, its supply-management division handling air freight, trucks and warehouses around the world, Mr. Skou said.
Maersk aims to replace the roughly $10 billion revenue that would be lost from the energy division—about a quarter of the group’s total revenue—with the expansion in transport and logistics, he said.
Maersk Line earlier in December bought German container operator Hamburg Süd for about $4 billion, and it is looking for more acquisitions to boost its market share.Maersk shares closed up 4% in Copenhagen trading.
“For those who want to invest in the industry, merging and acquiring capacity is the most rational way to do it,” Mr. Skou said.
Container ships move 95% of manufactured goods, from designer dresses to heavy machinery. But over the past two years, the industry has seen freight rates tumble amid a capacity glut that prompted price wars between operators that have pushed freight rates to levels barely covering fuel costs.
That has kicked off a round of consolidation in which the top players are trying to bulk up to obtain more pricing power when the industry recovers.
Vincent Clerc, the chief commercial officer of Maersk Line, said a “violent price war” is starting to self-correct.
Compared with the rest of the world, freight rates out of China were hardest hit in the current downturn, but they appear to have bottomed out, he added. Freight rates have averaged around $700 a container a month since the start of last year on the benchmark Asia-to-Europe route with the break-even point at $1,400. Shipping executives estimate the top 20 operators will post this year combined losses of as much as $10 billion.
