Wednesday, September 2, 2020

More Changes at Shipping Group as Container Lines Morph Into Logistics

Collateral Damage as Another Iconic Brand Disappears
Shipping News Feature

DENMARK – SOUTH AFRICA – WORLDWIDE – Having just reorganised things at its subsidiary container line Hamburg Süd, AP Moller Maersk has now altered matters at one of its older brands, Safmarine as the group moves further toward a logistics provider model.

Over recent times the shipping lines have of course found it far easier to transition to this position than, for example, an asset light freight forwarder would find it to move in the other direction and become a vessel operator. Now another iconic brand is to be swept up in the drive to become an integrated container transport and logistics company.

The Safmarine brand will be integrated into Maersk whilst the Damco brand’s Air and LCL (Less than Container Load) offering will be combined with Maersk’s logistics and services products to complement its end-to-end portfolio. In addition, a simplified and ‘customer-centric’ global Ocean and Logistics organisation is being introduced.

Maersk says the similarity of culture between its main container operations and Safmarine have grown ever closer, particularly as the overall business accepts more digitalisation. Meantime, since focusing purely on freight forwarding in 2018, Damco is said to have demonstrated significant value to customers in the Air and Ocean LCL space. During this time, the group believes that it has become apparent through close customer engagements that the value proposition of Maersk (and presumably the profits) can be greatly enhanced with the expansion of multiple modes of transport.

It concludes that the integration of Air and LCL into Maersk will help meet these needs and give businesses access to a 'simplified, connected and agile experience' under the Maersk brand, as well as to its scale. Maersk uses its own assets to offer unique value propositions, hence it will not pursue the ocean FCL multi-carrier product (NVOCC) as a general offering. Vincent Clerc, CEO of Ocean & Logistics, AP Moller Maersk explained the logic behind the various changes:

“Our customers are at the heart of our vision. Their evolving supply chain needs are increasing the demand for multiple modes of transport and to meet these needs, we’re bringing our company’s expertise and capabilities even closer together. Taking these steps are key to accelerating our transformation. With the integration of Safmarine, we can present Safmarine customers with the full ocean and supply chain offering and more scale. At the same time, I’m very excited to have Safmarine’s passion for customers closer to Maersk by uniting our teams.

“Businesses need Air and LCL products to connect their supply chains and with these offerings firmly placed in our global integrated portfolio, we aim to serve our businesses better and more efficiently across their supply chains. Our colleagues in Damco have delivered a remarkable effort under challenging market conditions, serving customers through focus, discipline and expertise which will now be a strong asset for our customers in Maersk.”

As reported yesterday Maersk says it will simplify its organisational structure across Ocean and Logistics globally to further improve customer centricity and efficiency. As part of this, the back offices of Maersk and Hamburg Süd will come closer together into more customer-centric teams, while continuing to meet customers as two separate brands with a differentiated service model.

The bottom line however is that, due to the changes, the Safmarine and Damco brands will no longer be marketed by the end of 2020. The loss of the Safmarine name will doubtless sadden those familiar with its former trade as a company formed in South Africa a year after the end of World War 2, and which built its reputation on fresh chilled exports, passenger traffic and heavy lift vessels until it entered the container trade in the late 1970’s.

Photo: The Safmarine vessel S A Oranje after her renaming ceremony on the 2nd February 1966 by Mrs H F Verwoerd, wife of then Prime Minister Dr Hendrik Verwoerd. The ship was formerly the Pretoria Castle, built in Belfast just as the Safmarine company was formed and originally christened by the wife of the former South African Prime Minister Jan Smuts.