Maersk May Face Crisis: Economist

Maritime Activity Reports, Inc.

September 13, 2016

Photo: Maersk Group

Photo: Maersk Group

 Shipping industry faces worse storm than after financial crisis. The  industry has been squeezed on both the supply and demand sides: too many vessels have been built and not enough scrapped, while global trade has slowed down.

 
The Economist says that the industry leader A.P. Moller-Maersk is not exempt from the crisis.
 
"Eyes are trained on changes at Maersk Group in particular, which has long set the course for the industry. The Danish line has probably lost only $11 per container moved this year, less than the $100 figure for companies like Hanjin, but that is still unacceptable to its bosses and to the family that owns it," says the report.
 
Maersk Group is considering splitting up the conglomerate, and are due to announce details this month.
 
Soren Skou, who remains CEO of Maersk Line as well as the overall group, has said he wants to see the group’s revenues grow, and its oil division will struggle to play its part in this. One short-term but serious problem for Maersk Oil, for example, is that production could halve by 2018 because its licence to operate Qatar’s largest offshore oil field is expiring in July next year.
 
Maersk Line, in contrast, starts from the position of being the biggest shipping firm in the world. Yet it too has lots of work to do if it is to boost revenues and profits from shipping. 
 
The Danish firm’s three-year-old analytics team has also worked on discovering the optimal speed and course for its ships. They are trying to cut its big repair bills, too. 
 
The hope is that predictive maintenance could achieve this quickly. Instead of waiting for ship engines to break down, sensors will report when they need care.
 
What Maersk Line does in digitisation is likely to be followed by the rest of the industry in fairly short order. As an executive at one of Maersk Line’s rivals admits: “We just watch what Maersk does and copy it.” 
 
And although few shipping outfits have the resources to build ever bigger ships, even the smallest of them can learn to use data better. Data crunching alone will not save the industry from the current storm; that will require ships to be scrapped. But it may prepare it better for the next one.
 
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