This week, shipping giant Maersk announced it plans further transformations as it seeks to re-shape logistics.
In a presentation to its investors, Maersk confirmed its intention to become more involved in different areas of shipping and logistics than the shipping giant’s main focus to-date: ocean shipping. The company’s goal is to become a leader in land-based freight logistics, as well as more closely integrating its ocean and logistics divisions.
Coming on the heels of positive and strong earnings in 2020, Maersk is seeking to become a more “end-to-end logistics” provider, acknowledging that right now it is known as a leader in ocean freight. Maersk Chief Executive Soren Skou told news outlet Reuters: “I don’t want to put a date to it, but I’m certain that our logistics business has potential to become just a big as ocean shipping measured in turnover.”
Maersk points to COVID-19 as a leading factor pushing for transformational change at the shipping giant.
The Maersk CEO further put the desire to make this major transformation at the heels of the COVID-19 pandemic, arguing that post-COVID and the delays and turmoil that came with the pandemic for shipping, customers want an all-in-one solution from one provider. Currently, with Maersk enjoying over 70% of its revenue from ocean shipping, many customers have to look elsewhere for land-based transportation, storage, warehousing, and more.
During the COVID-19 pandemic in 2020 and 2021, the shipping industry has been plagued with a series of major issues that have undermined delivery performance and reliability. Among these factors are sky-high demand for goods from China and other exporters, backorders from Chinese factory shutdowns and the Chinese New Year, world events such as the Suez Canal blockage incident, container ship shortages, and port/terminal congestion on the U.S. West Coast. These factors have, in the eyes of Maersk, pushed the company to look to the future and develop an all-in-one approach to shipping.
The company will make a series of investments to try and achieve its integration goals.
As part of its overall plan for the future, Maersk says it will invest about a billion dollars into overall growth through mergers, acquisitions, and other strategic partnerships to grow its capacity and reach. Additionally, the company will spend around $600 million to automate many shipping terminals. In return, Maersk hopes these investments will turn it into a more-efficient operation with greater reach across ocean shipping and land-based freight, as it looks to take on companies such as Walmart, Amazon, and others with their trucking and transportation solutions.