‘Cold Chains’ a More Attractive Investment: Maersk

Following its new strategy in 2016 from shipping brand to total logistics provider (from Maersk Line to Maersk) in 2016, Danish giant company Maersk continued to focus its land transportation business unit.

 But, rather than investing in freight trucks and threatening the core business of large freight forwarding companies expansion, Maersk prefers to focus on transportation of perishable goods, the business it says as ‘cold chain’.

 Talking to press early this week, chief executive of APM Terminals and member of Maersk’s executive board, Morten Engelstoft, said Maersk had room to “catch up” with rival shippers in its land transportation business.

 “Compared to the other shipping lines, our share of the inland business is lower percentage-wise,” Engelstoft said.

 Rather than investing in freight trucks and threatening the core business of large freight forwarding companies – many of whom are Maersk’s own customers – Engelstoft pointed to so-called ‘cold chains’ as a more attractive investment.

 Transporting goods in a ‘cold chain’ means keeping perishable goods, like fruits or meat, refrigerated throughout the entire journey in order to keep goods fresh for longer.

 Maersk (MAERSKb.CO), the world’s biggest shipping company, plans to focus on premium services such as cold storage and digital solutions to avoid competing with its own freight-forwarding clients as it expands in the land transportation business.

 Since announcing a new strategy in 2016, which included selling its oil and gas business, Maersk has focused less on market share and more on profitability and cost-cutting in its container and logistics business.

 It now hopes to see its terminal and inland logistics operations, the non-Ocean business, make up a bigger part of its future earnings. In 2018, the ocean transport business accounted for almost 80% of core earnings.

 While Maersk moves around one in five containers shipped at sea, it handles land transportation from ports to warehouses and distribution centers for less than a quarter of its customers.

 

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