Maersk in-house consolidation
<b>Analyse:</b> Safmarine has announced its intention to integrate its internal support and management functions into those of its sister company, Maersk Line.
To many in the industry, this development came as a surprise since Safmarine had built its brand and reputation as an independently managed multi-trade shipping company,although
it had been owned by the A.P. Moller-Maersk Group since 1999.
Headquartered in Antwerp, Safmarine has primarily applied its maritime business strategy into the sea transportation of cargoes between Africa, the Middle East, and the Indian Subcontinent, in addition to operating to other trades. However, it is Africa where its network is really focused, and at the beginning of 2010, according to the company, Africa accounted for approximately 48% of its total global volumes, with South Africa contribution alone standing at 38%.
While focusing into offering containerised shipping services, the company also has a division – referred to as MPV – which offers services for break-bulk and project cargo, thus differentiating its product from that of its sister company, Maersk Line.
According to Lloyd’s List Intelligence, Safmarine offers its customers a choice of more than 40 shipping services - more than 30 of these are containerised shipping services and six are MPV services. Safmarine’s fleet today stands at 63 vessels with an aggregate capacity of 118,000 TEU. Of this figure, 47 vessels totalling 105,000 TEU are fully cellular while the remaining 16 vessels totalling 13,000 TEU are general cargo/break bulk vessels.
Safmarine’s cellular fleet includes a mix of feeder/feedermax/panamax vessels with its largest vessel currently standing at just over 4,100 TEU, although its current orderbook includes 3 x 4,500 TEU fully cellular vessels due to be delivered in the next two years. In 2010, the company took delivery of the Safmarine Sumba and this was the first owned MPV since it became a member of the A.P. Moller Maersk Group. A total of 3 x 1,200 TEU general cargo vessels are currently on order, flagged in Singapore, and destined for the Africa trade.
There have been several benefits involved since the acquisition by A.P. Moller-Maersk, with Safmarine being given access to the Group’s extensive global shipping, IT and HR networks and with its business cargo volumes grown significantly from approximately 180,000 FEU to 800,000 TEU during that 12-year period.
Safmarine is also slot-chartering on several Maersk services that cover the major east-west trades.
So what is the reason behind this sudden integration of several of Safmarine’s functions into Maersk Line, when for so long the company had been allowed to be managed independently, strengthen its brand, and preserve its identity in a region where it has a strong following?
Maersk has highlighted the need to ensure management efficiencies and control costs, and it is true to a certain extent, that maintaining separate front office staff at different local branches around the world in addition to other relating overheads, can add significantly to the Group’s overall bottom line. Safmarine currently does business in more than 110 countries and its total workforce stands at over 1,700 people, and it is expected that this impending integration will cost 240 jobs. Regional offices in Antwerp, Shanghai, Mumbai, Singapore and Capetown will also close. However, the General Cargo Vessel business of Safmarine will remain unaffected and will continue to develop independently from its current base in Antwerp.
Although Maersk has been quick to strongly emphasize the point of continuing to allow the Safmarine brand to grow further as part of Maersk’s line business strategy of providing differentiated customer offerings, it should be remembered that regional brands have proved to have a limited life and many have disappeared in the course of the years, including P&O Containers, Sea-land, Lykes, Canada Maritime, and most recently OTAL line, as a result of an increasingly competitive globalised marketplace.
Only last month, Maersk’s CEO Eivind Kolding, advised that he expected to see the current downturn lead to a new round of industry consolidation – in one sense, this process might as well have started in-house.
Source: Containers Review / Lloyd's List Intelligence
