Move it with Maersk

The little Danish shipper that survived the storms

While in Copenhagen, we visited Maersk Group, the worlds largest containership operator and associated services. Our hosts Jonas Linnebjerg, Thomas Lassen, and Frederik Dago very graciously shared some knowledge about Maersk and the company’s strategy. The parent company Maersk Group had total revenue of ~$39 billion in 2018 but has suffered from industrywide anemic profitability. According to Mr. Linnebjerg, head of the internal management consulting team, the company is divesting from its historical conglomerate model to focus on core strengths such as container ships, terminal operations, and tugboat services. In the past the company had bloated to include banking services, grocery retail, and oil production.

I asked Mr Lassen, head of strategy development, why he thought his Danish company had been able to weather the stormy shipping business environment. One advantage he mentioned is that the founder’s family has retained controlling ownership. This concentrated ownership structure minimizes the short term focus of many publicly traded companies. The family owners also accept lower than average returns on capital in order to maintain control of their heritage firm.

Maersk Mc-Kinney Moeller was a legendary businessman in Denmark. He led Maersk Global until his death at 98. According to Mr Lassen, Mr. Moeller always climbed the stairs to his 6th floor office and no employee would dare take the elevator while Mr. Moeller was walking the stairs.

In the past, large shipping industries(like in England, US, France, China) could only grow if their national government subsidized shipping through military contracts and to boost export industries. Maersk is based in relatively small Denmark but miraculously has survived and become the largest firm in its sector. This is partly due to the Maersk family’s dedication to maintain control of the business(minimal loans) and acceptance of low profits but conservative growth strategy. 

Checkout this cool interactive visual of global shipping

If the interactive map above doesn't work click this link:

Shipping is usually B2B so I started thinking like a supply chain manager. Here’s a practical example, if I want to import Finnish saunas from Finland to California then most likely containerized ocean freight will be the best option compared to air freight. According to the Maersk website search function the journey from Helsinki to Los Angeles will take 46 days and ships leave every 7 days. The route includes two ships, one within the Baltic with a few stops before transfer to dockside storage in Bremerhaven in NW Germany. The container then is transferred to another ship in Bremenhaven where it starts the journey across the Atlantic, through the Panama Canal, and up the west coast of the Americas until it arrives in Los Angeles. 

Anyone ready for a surf, sauna, and shaka in California?