Thursday, 29 November 2012

AP Møller-Maersk puts the brakes on Maersk Line

The world’s biggest container ship operator, AP Møller-Maersk, has sent a shockwave through shipping by saying that it will significantly change strategy and shift investment away from the container segment of the industry to more lucrative areas. CEO Nils Andersen told the Financial Times that his company would no longer invest ‘large’ amounts in Maersk Line; the money is better invested in other maritime sectors like ports, drilling rigs and oil, Anderson feels.

“We will move away from the shipping side of things and go towards the higher profit generators and more stable businesses. We are not going to invest significant amounts in Maersk Line (over the next five years). We have sufficient capacity to grow in line with the market,” Andersen said. 

Some industry watchers say that Maersk’s move- the company controls almost a sixth of the global container market- may be aimed at rebalancing its portfolio of businesses because of the volatility in the container freight markets. Others are more pessimistic, claiming that Maersk’s decision underscores the overall circumspection that has hit shipping in the present gloomy scenario. As FT writes, ‘The Company and what it says about trends in global trade are seen as a barometer for the container shipping industry’. Analyst Dan Togo Jensen is quoted as saying, “It makes sense to put the brakes on the container side.”

“When we have taken that shift, probably more than 50 per cent of our capital will be tied up
 in these three other businesses. Maersk Line will then account for 25-30 per cent of capital. We will have four businesses of almost equal size,” said Maersk CEO Anderson, talking about his company’s strategy shift.

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