Maersk to Reorganize Eliminating Brands and Consolidating Operations
Just weeks after announcing a significant increase in operating earnings and forecasting a quick rebound to pre-COVID-19 levels, shipping giant A.P. Moller – Maersk announced broad changes to its organization designed to speed the company’s transition to becoming an integrated container and logistics company. The plan calls for consolidating operations and eliminating brand which will also have a broad impact on the company’s workforce.
Saying that the initiatives would further improve customer service by providing end-to-end service delivery connecting and simplifying customers’ supply chains, the storied Safmarine brand will be merged into Maersk while the Damco brand’s Air and LCL (Less than Container Load) offering will be combined with Maersk’s logistics and services products.
Employing approximately 80,000 people worldwide, the restructuring initiatives are expected to impact as many as a third of all the company’s global employees. Maersk did not provide details on how many people might lose their jobs, but reports from the Danish stock exchange suggested that four percent of the workforce might lose their jobs or approximately 3,400 people. No specific timeline was offered other than to say the Safmarine and Damco brands will no longer be marketed by the end of 2020.
The company’s official announcement of the changes quoted Vincent Clerc, CEO of Ocean & Logistics, A.P. Moller – Maersk as saying, “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.”
Saying that the value propositions of Maersk and Safmarine have converged as the digital interactions with customers have increased, Safmarine’s announcement of the changes said that, “The integration will be a phased approach lasting throughout 2020 to minimize customer disruption and taking the best care of employees through the transition. As of October 2020, Safmarine teams will begin to integrate into the new Maersk organization, combining the strengths of both brands. The Safmarine brand will no longer be marketed by the end of 2020.”
Similarly, talking about the convergence with Damco, Maersk said, “it has become apparent through close customer engagements that the value proposition of Maersk can be greatly enhanced with the expansion of multiple modes of transport. Since 2018, Damco has focused on freight forwarding in the Air and Ocean LCL space. “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.”
In addition, Maersk said it will also simplify its organizational structure across its Ocean & Logistics operations globally to further improve customer service and efficiency. As part of this, the back offices of Maersk and Hamburg Süd, which Maersk acquired in 2016, will be coordinated into a single operation. Hamburg Süd said that the new structure would create more flexibility in responding to changing market trends as well as its agility and speed to market in the development of new products but emphasized that it would continue as an independent brand with no changes to its customer-facing operations.
The broad changes to the organization are seen both as a response to the pressures in the market created by the economic challenges of COVID-19 as well as in response to investors who were anxious for the company to accelerate its transition to realize the benefits of the size and scope of its operations.