Maersk Group and the Future of Container Shipping Business: LOGISTICS STRATEGY OF MAERSK LINE

1. Maersk Group and the Future of
Container Shipping Business
GROUP 2:
HOUCEM EDDINE CHERNI, Tunisia
MOHAMMED MOJAHID HOSSAIN CHOWDHURY, Bangladesh
YONG CHARLES NJUH, Cameroon
SINDISWA CINDY DUBE, South Africa

2. LOGISTICS
STRATEGY OF
MAERSK LINE

3. OUTLINE
1. INTRODUCTION
2. MAERSK GROUP OVERVIEW
3. PROBLEM STATEMENT AND GOAL SETTING
4. MAERSK LOGISTICS STRATEGY
4. 1. MARITIME SEGMENT
4. 2. INLAND SEGMENT
5. COST AND SERVICE QUALITY TRADE OFF
6. CONCLUSION

4. Brief Overview of Maritime Logistics
Definition of Logistics in general:
Logistics is the process of planning, implementing and controlling the
efficient, cost effective flow and storage of raw materials (containers), from
the point of origin to the point of consumption
(Council of logistics management)
Maritime logistics in liner shipping perspective:
Logistics is to offer the right services in the right place at the right time and to
fast deliver the containerized goods in a desired condition at the lowest cost
and highest return on investment

5. Maersk Line and It’s Logistics Network
DAMCO
APM TERMINALS
MAERSK LINE

6. Maersk Line and it’s Logistics Network
Shipping and Cargo Services
● Shipping Services
● Warehousing and Distribution
● Value added services
● 4PL

7. Problem Identification (From the Logistics Perspective)
● Problems Related with Overbooking:
• Inaccurate demand forecasting (bullwhip effect)
• Impacting on-time reliability
● High terminal handling costs
● Complex inventory management (ship space)
● Complex and inflexible container networks (Seasonality, infrequent supply and demand)
● Large customers frequently used multiple carriers to ensure a high frequency of sailings
and price competition amongst carriers (Trade off between Lean and Agile supply chain
● Managing empty container flow due to trade imbalance (Europe to Asia )

8. Goal Setting Based on Problem Identification
● Providing end to end logistics services
● Scheduling and Network Coordination
● Moving towards 4PL logistics chain provider
● Cost efficiency: vessel, container and freight perspective
● Maximize the benefits from alliances
● Improve customer services

9. Development of Logistics Strategy of Maersk Line
● Enlargement of the logistic strategy focus to cover end to end services instead of providing
only major container ports connection through linking the:
• East-West major routes segment with,
• North -South secondary routes segment and
• Inland freight forwarding segment
● Achieving scope economy as well as scale economy
Customers benefit
Company benefit
Transshipment
service
Direct service
Freight forwarding
service
Freight forwarding
service

10. Development of Logistics Strategy of Maersk Line
Customer
services goals
● Time
● cost
Location Strategy
● Global network
● Ports selection (principal, secondary)
Transport strategyInventory strategy
Logistics triangle strategy: Maersk
● Reduce time storage of
containers in ports
● Optimise ship’s space
utilisation
● Avoid blank sailing
● Hub and spoke network:
- Direct multi-port connection
- Indirect feeder connection
● Sail scheduling: time and
frequency

11. Transshipment
or feeder
service
Direct service
Freight forwarding
service
Freight forwarding
service
Cargo owner Cargo receiver
Horizontal integration of Maersk line
Linking major routes with feedering routes
Global coverage
Door to Door
Maersk Lines’ Logistics Strategy on Maritime Legs

12. Maersk Lines’ Logistics Strategy on Maritime Legs
● Dimensional global maritime network (Sealand and Safmarine, 1999)
● The role of the hubs
○ Network/ traffic interconnections (Algeciras, Tanjung Pelepas, Salalah, Miami)
○ Hinterland interconnections (Rotterdam, Felixstowe and Bremer for Northern
European countries, Hong Kong serves the Pearl River delta but also permits
connections with Chinese ports)
● “Hub and Spoke” network permits Maersk to operate as a niche shipping line
● For strong influence on freight pricing and monopoly position, the choice of hub
port and its terminal operation is a crucial logistics decisions

13. Ports located in zones which are served from the hubs
● Monopoly position in terminal operation: 100% in 31 ports, 50% in 62 ports and 30% in
110 ports
Regions Port
Western Mediterranean/North African and Western African/South African
ranges
Algeciras
Baltic ranges Bremerhaven
The Middle Eastern ranges Salalah
The East Coast of North America and the East Coast of South America Miami or Colon
South–Eastern Asia, Indian subcontinent and Australia/New Zealand. Tanjung Pelepus

14. The Distribution of Hub Shipping Network of Maersk Line
The location of the ports where Maersk provided
more than 30% of total port WCTC in 2002

15. Transshipment
service
Direct service
Freight forwarding
service
Freight forwarding
service
Cargo owner Cargo receiver
Vertical integration of Maersk line
Adding up container and freight logistics for better vessel logistics
Door to Door
Maersk Lines’ Logistics Strategy on Inland Legs

16. Freight forwarding and shipping line integration:
From the control of boxes to value added logistics providers
Container logistics Freight logistics Vessel logistics
● Better management of
container stock
● Accelerate the container
turnover before and after
maritime leg
● Better client services in
container allocation in the
right time and place
● More control of non
maritime costs
● To provide value added
logistics services such as
warehousing, custom
clearance
● To satisfy shipper needs
especially related to transit
time as well as better
inventory management of
the shipping line
● Consolidate Information
flow
● Capture the cargo from
source
● Cost saving of maritime
leg

17. Freight forwarding and shipping line integration:
From value added logistics providers to integrated supply chain
Integration with inland transportation services
(truck, train, barge)
Freight forwarding and further integration
Integration with inland logistic provider
Outcomes:
● Shifting from a logistic service provider 3PL to full supply chain integrator 4PL
● Shared use of the same extended information system throughout the logistical chain to fill
vessels and build up customer loyalty
● Diversification of the firm’s activity
● Realizing global network

18. Maersk line Inland network example

19. Transshipment
service
Direct service
Freight forwarding
service
Freight forwarding
service
Cargo owner Cargo receiver
Vertical integration of Maersk line
Adding up container logistics for better vessel logistics
Door to Door
Maersk Lines’ Logistics Strategy on Inland Legs

20. Maersk Lines’ Logistics Strategy on Inland Legs
Outcomes:
➢ Efficiency of port handling
➢ Reduce the risk of hub relocation
➢ Client satisfaction in reducing time and costs
➢ More control in the logistic chain by avoiding the flow interruption of the
inland transport system
➢ Acquire competitive advantage over competitors
Container Logistics Vessel Logistics
● Optimize the relocation of
container in ports
● Accelerate the container turnover
● Control container handling costs
● Optimizing ship space utilization
● Keep the number of call to
minimum
● Accelerate vessel turnover
● Reduction of vessel operational
cost

21. Maersk Lines’ Logistics Strategy on Inland Legs
Vertical Integration
ECONOMY OF SCOPE

22. Cost and service quality trade off
Customers advantages Customers disadvantages
 No need to transact with multiple
suppliers or coordinate several
handovers, one partner for custom
clearance, port delivery trucking and
depot needs
 Single point of contact in case of any
issues, last minute changes, and special
requests
 Not to be dependent on only one
shipping line as anything can happen
thus necessity to deal with several
shipping lines
 Products are located far from the
customers as a result of centralisation
 A lot of uncertainty as the network is
vulnerable to disruptions

23. Cost and quality service trade off
Shipping lines advantages Shipping lines disadvantages
● Reduction in facilities costs(warehousing)
● Reduces the needs for safety
stocks(inventory)
● Lowers the inbound transportation cost
● Fully interconnected network as a result of
the several hubs
● Shipping line enjoys economies of scale
● A large coverage of the logistic and supply
chain system
● Increase in the number of transshipment
operations as a result of several hubs
● An increase in outbound transportation
cost
● Remarkable increase in transit times

24. Conclusion
 The developed strategy for Maersk logistics is based on door to door services instead of
only port to port transport. In the aim of achieving a global coverage, to satisfy its clients
and generating more profit, Maersk line has to consider to achieve Scope Economy on
top of the Scale Economy that has already achieved.
 The development of a tripartite strategy that stands on vessel, inventory and location
strategies is a way for achieving the goals. The interdependence and complementarity
between them will allow the company to be more efficient and obtain a competitive
advantage over its competitors.
 A derivative outcome of establishing such strategy is that Maersk line become more
represented as a logistic chain integrator rather than only logistic service provider.
Thanks to all kind of integrations that this strategy has provided, the portfolio of Maersk
line has been diversified which allow it to stand on the top listed shipping line companies.

25. References
Frémont, A. (2009). Shipping lines and logistics. Transport Reviews, 29(4), 537-554.
Fremont, A. (2007). Global maritime networks: The case of Maersk. Journal of
Transport Geography, 15(6), 431-442.
Song, D-W (2020). Fundamentals of Logistics and Supply Chain Management
[PowerPoint slides].
Song, D-W (2020). Principles of Shipping Logistics [PowerPoint slides].
Song, D-W (2020). Seaborne Trade and Global Logistics [PowerPoint slides].