BY IRA BRESKIN
MARITIME/PORTS
Transportation Report
LINER SHIPPING FIRMS ARE
upgrading their offerings to attract the
premium business needed to bolster
the industry’s anemic margins. Yet it is
shippers, intermediaries, and beneficial
cargo owners (BCOs) who will render the final judgment on the strategy, and the jury
remains very much out.
Led by the Danish giant Maersk Line and French line CMA CGM, carriers are building end-to-end service portfolios that leverage their scheduled sailings. These initiatives come as liner operators posted modest operating earnings in 2017 that followed
big losses in 2016. Volume growth has slowed this year due partly to fears, which seem
to be becoming reality, of a trade war between the U.S. and China.
Carriers said they are committed to ending their overreliance on pricing regimes
that have sacrificed margins on the altar of market share and that have resulted in billions of dollars in losses. Yet such a dramatic shift to emphasizing value-added services
is inherently risky. It requires substantial investments in processes and technology,
costs that need to be recouped by attracting new high-margin business. It is unclear
if users accustomed to enjoying cheap rates on sailing services will go for pricier, value-added solutions or would rather maintain the status quo.
Transforming liner carriers into seagoing versions of nimble competitors is a tall
order. Maersk CEO Søren Skou, who outlined a plan earlier this year to become a
“global integrator of container logistics” on a par with firms like FedEx Corp., UPS
Inc., and DHL Express, acknowledged that Maersk’s strategy, which will take three to
five years to implement, is “pretty complicated, with multiple dimensions.”
CMA CGM joined the value-added service fray last spring when it took a 25-percent
stake in Dutch third-party logistics service provider (3PL) Ceva Logistics and said it
Ocean carriers
are looking to
reinvent themselves
as providers of
premium value-
added services. The
question is, are
shippers willing
to pay for the
upgrades?
Container-line
transformation
faces its biggest
test from those
paying the bills
