According to several reports, logistics giant Maersk might soon announce plans about a large scale reorganization that is intended to trim the company. The plan might be disclosed as soon as the end of this week.
This reorganization will also have to affect the employees of the company. Maersk has already confirmed that there will be job cuts. They also say that the steps are being taken as a part of their restructuring drive as they aim to simplify the organization and reduce costs.
The logistics giant has a huge user base, handling the majority of containers worldwide. The company handles one in every five containers shipped worldwide.
CEO of the company, Søren Skou, has been under tremendous pressure from investors since he took over the office of chief executive officer in 2016. The investors ask the company to deliver better results and increase the share price. However, the company was unable to achieve any of those.
For the last two years, the main focus of the company was mainly to improve its efficiency. Now, with this reorganization within the company, they target to save money along with their improving efficiency.
The company’s laid out strategy for the future indicates that from now on they will solely look after their core business, which is the Ocean division and the logistics business. This is where the company looks to invest more in the future.
Although the company when being questioned about job cuts confirmed that their reorganization plan will impact jobs, but did not provide further details about it.
When PTI sent in an email query, the company answered, saying, “Simplifying the organization will regrettably impact jobs due to the discontinuation of duplicate roles and roles that will no longer be needed. We are committed to working with our employee representative bodies across the impacted locations throughout the process and aim to finalize the process for most locations by 1 October.”
They also regretted that they will have to let people go due to the reorganization, but also said that this is a necessary part in their effort to reduce cost so that they can drive sustainable growth as they pursue their strategic objectives.
Neither the reorganization nor the job cut that comes with the reorganization is due to the coronavirus pandemic. Maersk has steered past the COVID-19 pandemic quite elegantly without much of a struggle so far. But the steps were taken mostly to streamline the organization and save money in terms of management costs.
They also claim that they would look to achieve improvement in their customer service and also enhance their end to end service. The Safmarine brand will also be pun under the same name as the company will get integrated with Maersk. They also informed that the Damco brand’s Air and LCL (Less than Container Load) offering will be combined with Maersk’s logistics and services products. This would be done with a long term aim to complement its end-to-end offering.
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Vincent Clerc, CEO of Ocean & Logistics, A.P. Moller – Maersk said, “With the integration of Safmarine, we can present Safmarine customers with the full ocean and supply chain offering and more scale. At the same time, I’m very excited to have a Safmarine’s passion for customers closer to Maersk by uniting our teams.”
The company, Maersk also said that the Damco brand has demonstrated significant value to customers in the Air and Ocean LCL space. They also say that the integration of the brand with Maersk will bring about an enhancement in the value propositions of the company. Maersk can also now expand its service to multi modes of transport.
Shipping and Logistics companies are integrating their subsidiaries under their main brand, says analyst Lars Jensen
According to a LinkedIn post of a “leading expert in the container shipping industry” Lars Jensen, shipping companies around the globe are focusing to bring their subsidiaries under one brand name disposing of their multi-brand strategy.
Tuesday’s announcement of Maersk that they will discontinue their subsidiaries Damco and Safmarine confirms the analysis of Lars Jensen where he said: “the era of large carriers having a multi-brand strategy on the major trade lanes is coming to an end.”
He also highlighted that CMA CGM also recently decided to abolish APL as an independent brand. The French container line acquired the Asian shipping line APL in 2016 since which it has functioned independently under its wing until this July when the decision was taken to abolish its name.
He also noted in the same LinkedIn post that the company Hapag-Lloyd AG has always worked under its own name and with a clear approach. They also abolished the names of the companies as they get acquired by them.
He also questioned the future of Hamburg Süd, which Maersk acquired in 2017, and Hong Kong-based OOCL, acquired by Chinese Cosco in the same year.