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Maersk shifts the focus of future investments to the development of ground logistics

20 November 2019
Logistics News

The world's largest container line, Maersk, refuses to buy new vessels and intends to focus on the development of land logistics, TASS reports citing an interview with the head of the Danish corporation Soren Skou Wall Street Journal.

“Our focus is on costs,” Skou said in an interview with WSJ on Friday after the company released its third quarter results. Maersk's profit exceeded analyst expectations, despite lower revenue. “We pay great attention to controlling capacity and network capacity.”

The Maersk strategy provides for non-participation in the “arms race”, in which several container lines in Asia and Europe placed next orders for megacontainer carriers, significantly exceeding the size of the largest vessels in the Maersk fleet.

According to Skou, instead, Maersk will direct its investments to the development of a “neo-oceanic” business, which it considers more promising in terms of profit.

Including, the company will increase investments in land acquisition for the construction of warehouse complexes, the development of customs service. “We have already invested about $ 1 billion in ground logistics, and we plan to invest another hundreds of millions next year,” Skou said, noting that he sets the goal of increasing the share of revenue from “non-oceanic” operations to half by the next three years. In the meantime, the revenue of the division providing logistics and related services amounted to $ 1.6 billion for the July-September quarter, compared with $ 7.3 billion in ocean revenue. Gross profit from the logistics and services division for the third quarter of this year increased by 13.4% year-on-year.

Maersk provides about 20% of all container shipping in the world. As a result of the quarter ended in September, the company received a net profit of $ 520 million, compared with $ 396 million a year earlier, and analysts' forecasts averaged about $ 359 million. At the same time, the total revenue of the group decreased by 1% to $ 10.06 billion, the revenue of the main division of ocean transportation and transit terminals remained at the same level as last year, since a 2.1% increase in volumes was offset by a decrease in the average rate by 3.6%.

Maersk predicts a slowdown in overall demand growth for the current year to about 2%, compared with 4.5% in 2018. At the same time, according to Braemar ACM Shipbroking, the global fleet capacity will increase by 4%.

“The 1.5% increase in volumes in the third quarter, traditionally a period of vibrant demand ahead of the Christmas sales peak, is a sign that the world is not turning around as fast as it was many years before,” Skou said.