The parent of Maersk Line, A.P. Moller-Maersk, is about to undertake a major restructuring of its container operations and remove several senior executives, the Financial Times reported, citing two letters to senior staff from Eivind Kolding, the container unit's chief executive.
Maersk Logistics will be separated from the container shipping line and other container-related businesses including ERS, the European rail operation, while trucking and warehousing will be become stand-alone divisions, the London newspaper quoted Kolding as saying.
Kolding warned that Maersk's container business had become bureaucratic and cumbersome and unless it turns around now, it will lose market leadership to rivals "in the very near future".
Moller last week reported container activities returned to profitability in the first nine months of the year, with earnings of $25 million against a year-earlier loss of $698 million. But Nils S. Andersen, who took over as chief executive on Nov. 5 as part of a major management shake-up, said the result "is still far from satisfactory."
In related news, Maersk Line said it will add four ships to its Asia-Europe routes in early 2008 in a bid to combat port congestion, cap soaring fuel bills and improve reliability of its liner services.
It said the four ships that it will be deploying in the Aisa-Europe trade will not be coming out of its U.S. services.
The carrier this year has reduced capacity on the trans-Pacific by 30 percent, said Gordon Dorsey, senior director of corporate communications in the U.S., in an interview.
But, at the same time, the world's largest container carrier is scaling back planned capacity increases on the Asia-Europe network by implementing various changes to its sailing schedules when the four vessels enter service next February and March.
"Port congestion has an escalating impact on our ability to provide reliable services to our customers," the Copenhagen-based carrier said in an announcement." The addition of four vessels will enable us to incorporate additional buffer time in our schedules."
The changes will also enable savings on bunker fuel costs as the added capacity will allow vessels to reduce their sailing speeds while maintaining schedules. Maersk said its fuel costs have more than doubled in the past 12 months.
While some trade corridors will experience a day or two more in transit time as a result of the changes, "we overall expect to offer a better service reliability," the carrier said.
Maersk said originally it had planned to boost capacity on the Asia-Europe trades by around 17 percent during 2008. But the changes announced will result in a 5-percent reduction, limiting capacity increases to approximately 12 percent. Maersk's traffic on Asia-Europe routes rose 18 percent in the first nine months of this year from the same period in 2006.