Friday 30th Sep 2016 - Logistics Manager

Maersk to integrate logistics and transport businesses

Damco and Maersk Line are to collaborate to deliver new customer solutions as part of a strategic shift that will see AP Møller – Mærsk become an integrated transport and logistics company, while Maersk Oil will be separated out.

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Søren Skou.

The group said the collaboration would be supported by significant investments into digital technology. Maersk Line will also target growth in market share both organically and through acquisitions.

Tough trading conditions in the liner shipping market meant that Maersk Line showed a loss of $151 million in the second quarter of 2016, compared to a profit of $507m the year before. The group launched a strategic review of the business in June.

It said that since 2008, the group had focused on building a global conglomerate with each business unit operating on arm’s-length principles. It believes that moving to a more integrated model for transport and logistics will enable profitable growth through stronger collaboration and disciplined capital allocation.

Transport & Logistics will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry based on a one company structure with multiple brands. The group said the strategy rests on three pillars to deliver long term profitable growth:

* Product offering and customer experience will be improved based on the combined capabilities of Maersk Line, APM Terminals and Damco in combination with digital solutions.

* By operating as one entity, Transport & Logistics will be able to make synergies and optimise operations.

* Strong capital discipline and better utilisation of assets will be pursued. When making investments, acquisitions will be the preferred option.

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Maersk offices, Copenhagen.

Maersk Oil will become a separate business focusing on optimising and strengthening its strong position in the Danish, British and Norwegian parts of the North Sea.

Søren Skou, group CEO of AP Møller – Mærsk, said: “Both Energy and Transport & Logistics have strategies positioning them for growth and strategic agility. Transport & Logistics will be able to provide new and digitised world-class solutions for customers, while at the same time capture functional cost synergies and better utilization of existing assets. Energy is well positioned to leverage Maersk Oil´s expertise and gain scale in select geographies, particularly in the North Sea. Its structural agility will enable management to pursue new and different structural solutions and investment.”

The group plans to unlock commercial as well as cost synergies by better utilisation of existing assets and by the development of new digital solutions.

“We expect to deliver revenue growth, cost efficiency and margin improvements. The estimated synergies are expected to generate up to two percentage points ROIC improvement over a period of three years. No material synergies are expected in 2016.”