Maersk Head To Focus On Profitability Over Market Share

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Next month will mark five years since Søren Skou took the helm at Maersk. Yesterday he gave investors and reporters a glimpse of where he sees the Danish transport giant heading in the coming five years, shrugging off concerns that 2M partner Mediterranean Shipping Co (MSC) will overtake it in fleet size, focusing instead on profitability and growing Maersk’s land-based logistics side of the business, reports Splash247.

The top containerline

“If MSC ends up having more capacity than we do, that’s not the end of the world,” Skou said during Maersk’s capital markets day. “That’s not how we think about being number one. Our focus is on having a much higher turnover per container that we ship.”

MSC, now led by Skou’s former COO Soren Toft, is on track to overhaul Maersk at the top of the liner rankings when its huge orderbook starts to deliver, marking the first time in more than a quarter of a century where the famous blue brand from Copenhagen will not be the world’s largest containerline.

Maersk top management made clear yesterday that they do not intend on growing the size of their fleet, rather the focus was on ensuring greater utilisation and a stronger take-up by customers of long-term contracts.

This reduces the likelihood of the industry going into another over-ordering spree of new tonnage. Maersk’s demand outlook for the coming years sees ocean volumes growing at just 1 to 2%, with management saying they intend to operate a fleet of between 4m to 4.3m teu, very similar to today’s fleet size.

Logistics progress

The focus will be on growing the logistics side of the business, something Skou said yesterday could match Maersk’s ocean revenues in the coming years as the company builds on its logistics integrator aims. A billion-dollar logistics acquisition is on the cards, Skou hinted. Container shipping accounted for 73% of revenues last year.

Skou told investors yesterday that he expected a return on invested capital (ROIC) above 12% from 2021 to 2025, compared with an average 2.3% in the previous five years. Five straight years of double-digit ROICs would be unprecedented in container shipping history.

On Skou’s determination to focus on profit over market share, Lars Jensen, CEO of consultancy Vespucci Maritime, commented via LinkedIn: “From a wider industry perspective this is important because it clearly signals that there is at least one major player not interested in playing the market share game. This in itself reduces not only the likelihood of the destructive price wars of the past, it also reduces the likelihood of the industry going into another over-ordering spree of new tonnage.”

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Source: Splash247

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