Maersk will phase out its Safmarine and Damco brands by the end of this year as the largest container shipping company simplifies how it faces customers and repositions itself as an integrator rather than just a carrier.
The company’s Tuesday announcement is expected to lead to a raft of redundancies and possible office closures, with Danish newspaper Borsen reporting a loss of 3,400 jobs, or approximately 4 percent of its workforce. The cuts will save Maersk about $200 million, investment research firm Jefferies said.
Maersk’s decision to drop brands comes just months after CMA CGM simplified its global brand network.
“These changes represent a major step towards becoming an integrated container transport and logistics company, connecting and simplifying customers’ supply chains,” Maersk said in a statement announcing the changes.
Under the reorganization, the Safmarine brand will be integrated into Maersk while Damco’s air and less-than-container load (LCL) business will be combined with Maersk’s logistics and services products to complement its own operation.
Maersk will also introduce a more simplified and customer-centric global ocean and logistics organization that will see the back offices of Maersk and Hamburg Süd move closer together into more customer-centric teams, while maintaining two separate brands and differentiated service.
“At the end of the day, whether to have multiple brands or not boils down to weighting two aspects against each other,” Lars Jensen, CEO and partner of SeaIntelligence Consulting, told JOC.com about the Maersk news. “There is value in only having one brand as you can leverage your scale advantage. There is value in multi-brands as you can have different customer-facing propositions.
“However, as digital tools become an ever more important part of the business, it might also be more difficult to differentiate the customer-facing services and that can tip the balance between the two,” Jensen added. “Keep in mind that Hapag-Lloyd has always eliminated the brands they have acquired such as CSAV and UASC, favoring the scale advantage. CMA CGM is also partially removing the APL brand now for the same reason.”
‘Evolving’ needs of customers
Vincent Clerc, A.P. Møller-Maersk chief executive of ocean & logistics, said Tuesday’s move was driven by the “evolving supply chain needs” of customers.
“... To meet these needs, we’re bringing our company’s expertise and capabilities even closer together,” he said. “Taking these steps are key to accelerating our transformation.”
Safmarine, which has a strong presence in Africa, was allowed a semi-autonomous trading existence after Maersk integrated the carrier’s management and internal support functions in a reorganization in 2011. This led to the closure of five regional offices and its Antwerp head office and about 240 job losses.
“I believe that Safmarine remains a strong brand in Africa, and not least in South Africa which is rather important to Maersk,” an Asia-based senior maritime executive told JOC.com. “Safmarine always had a people-first outlook, whereas Maersk was all about large shiny equipment, which was very evident in the two brands’ internal magazines.”
Clerc said Damco has “demonstrated significant value to customers in the air and ocean LCL” market since it focused purely on freight forwarding in 2018.
“During this time, 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,” Clerc said.
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.
The integration of Damco’s LCL business means Maersk will not pursue its own ocean FCL multi-carrier product.
Maersk spokesperson Signe Wagner told JOC.com the carrier was not prepared to discuss specifics of the potential impact on its workforce. “We are not able to provide any details on job losses at this point,” she said. “We have just announced the changes today to our colleagues and now the dialogue will be initiated with the relevant work councils in the affected markets,”
Contact Keith Wallis at email@example.com.