The Geography of Transport Systems
Jean-Paul Rodrigue (2017), New York: Routledge, 440 pages.
ISBN 978-1138669574
Maersk Shipping Line
Author: Dr. Brian Slack
1. A Global Maritime Shipper
Maersk is an old established company, founded in 1912 in Denmark by A.P. Moller. It has grown to become the world’s largest container shipping line, controlling a capacity above 2 million TEUs. It is likely to be the most globally oriented transport company, all modes included, since it support large volumes of long distance trade, has ship and port assets across the world and is also involved in logistics. The company has been an innovator, developing new approaches to shipping that have led to its present dominance. The company has from the very early days focused on general freight, tanker and shipbuilding. The son of the founder, Maersk-McInney Moller, whose mother was American, managed the company after the German invasion of Denmark in 1940, and operated the company from New York. After his father’s death in 1965 he became CEO and Chairman, the latter position he occupied until his 90th birthday in 2003. Maersk is still largely under the ownership of the family trust. As a family business it has been able to respond quickly to commercial and technological changes that have contributed to its growth.
The company was relatively late in adopting containerization, its major activities remaining in general cargo trades on the Pacific, and oil transport. The company obtained its first cellular ship in 1973. Thereafter, however, it began a rapid conversion of its fleet, most of which were new purchases from German and Japanese shipyards. It wasn’t until 1981 that the first container ships were built by its own yards, but thereafter it began producing ever larger ships, the owner recognizing the scale economies they provided. By the late 1980s Maersk shipyards were building the largest containerships afloat. The ability of Maersk to build ships itself enabled it to surprise the rest of the industry with ground-breaking developments. In 1996, for example, it introduced a class of ship with a capacity of 6,000 TEUs that was a breakthrough from the existing post-panamax ships. This was followed two years later by 8,000 TEU ships, and in 2006 it introduced a vessel class with a capacity of 14,000 TEUs. By emphasizing capacities of ships, the shipping line has been the industry leader, forcing its competitors to follow.
2. Port and Inland Operations
The company was also a leader in reshaping services. The increasingly global nature of the container market, along with the deployment of ever larger vessels caused Maersk to introduce a hub and spoke service network. In the late 1980s it established its own hub port at a little-used site in southern Spain, Algeciras, and quickly made this hub port the largest in the Mediterranean. Over the years it has progressively established other hubs, sometimes on greenfield sites, such as Tanjung Pelepas in Malaysia, frequently in major ports such as New York. From these hubs local distribution and inter-service transfers are arranged.
In the 1990s, facing increasing costs of providing global coverage, Maersk like most other major carriers, sought to share expenses by forming strategic alliances. Maersk joined forces with Sealand, the largest US carrier. Unlike the other alliances, however, this alliance developed into closer partnership, and culminated in the acquisition of Sealand by Maersk in 1999, establishing the company as the largest container shipping line. This marked a new phase in Maersk’s growth, a growth maintained by mergers and acquisition. In 1999 it also acquired the regional carrier Safmarine, and in 2006 it purchased P&O Nedlloyd, the world’s fourth largest carrier. In 2007 Maersk accounted for 17% of the world’s container carrying capacity.
Maersk is an excellent example of vertical integration. Not content to establish itself as the dominant ocean carrier, it sought to progressively bring more and more of the transport chain under its control as an source of revenue as well as to better service its ships. It is an important terminal operator (APMT), managing container berths for its own ships, as at Algeciras, but also for other carriers. Its terminal portfolio is the world's most extensive, covering almost every major market. It is actively involved in inland distribution in many markets, with the purchase of trucking firms and the creation of chassis pools in the US, operating rail shuttles from Rotterdam, and managing barge terminals in Germany. In addition, Maersk operates its own logistics company, providing its clients and others with supply chain management. In these ways the company is better able to manage its own traffic and realize profits from other parts of the supply chain. For a privately owned company from a small European country, Maersk’s achievements are remarkable.