Tuesday 2 December 08 - 14:12
 

Insight & Opinion

Maersk machine grinds on mercilessly

What is it they say, you have no friends in business? Well it seems that Maersk Line, the world’s leading container line in terms of slot capacity, is set to prove this old adage.

At the beginning of the year, Maersk Line announced that it was preparing to axe two to three thousand employees, around 10% of its workforce. Work in this area continues, and at the same time Maersk’s regional structure is being reorganised from 14 to 11 areas involving the merger of its Northeast Asia region (Japan and Korea) with the Greater China region, Oceania with Southeast Asia, and the Nordic (Scandinavia and Russia) region with the United Kingdom.

This internal focus at Maersk Line is not, however, likely to be the only outcome of what Maersk Line chief executive Eivind Kolding originally described as a new “streamline strategy.”

In the past, we have seen Maersk Line play some very interesting games when it comes to the selection of certain ports, one of the most memorable being how it played off Baltimore against New York when selecting a US east coast load centre. Now it seems that signs are appearing that Maersk Line is considering anew the leverage it has with individual ports and terminal operators (although this is unlikely to include its sister company APM Terminals) as part of its pursuit of a stronger profit profile.

Where it sees leverage then expect a list of demands typically involving a reduction in price and upping the list of service requirements including the payment of penalties if the required performance is not achieved. And don’t think you are entirely safe if you already have a contract with a way to run… that might just fall by the wayside too!

There is a ruthless determination afoot in Maersk Line to improve business performance with this described as focused on four key elements: filling ships with profitable cargo; product reliability; faster more responsive service; and reduced complexity and cost. This last element may have bigger implications for many ports and terminals than originally anticipated.

Motorship