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Brand consolidation accelerates across the liner universe

Yesterday’s annual culling of brands at AP Moller-Maersk has garnered plenty of discussion of what the news means in terms of liner consolidation.

Maersk announced on Tuesday that freight forwarder Damco and African shipping line Safmarine will cease to exist as standalone brands come the end of this year while a host of regional functions at another subsidiary, Hamburg Sud, are set to be brought under Maersk’s wing.

Lars Jensen, the CEO of Copenhagen-based SeaIntelligence Consulting, suggested in a LinkedIn post that the era of large carriers having a multi-brand strategy on the major trade lanes is coming to an end, noting how CMA CGM is dropping the APL brand on the transpacific from next month.

Hapag-Lloyd, Jensen observed, has had a clear approach, consistently maintaining a single-brand strategy, abolishing any other brands it has acquired in recent years such as CSAV and UASC.

Accessibility to bookings has enabled this transition

“If this is indeed a sign of the times to come, it of course raises the question as to not only the long-term future of the Hamburg Süd brand, but also – perhaps more interestingly –COSCO’s long term plans with OOCL,” Jensen wrote in a post that attracted plenty of comments including from Splash columnist Kris Kosmala.

Liners have paid for a brand’s goodwill in past acquisitions, Kosmala suggested, but like capital assets, the value of that goodwill depreciates over time.

Many argued that the decision by liners to focus on one brand was driven by digitalisation.

Mary McNelly, director of global logistics for footwear firm Crocs, wrote that the Safmarine and Damco decision could only have been taken thanks to Maersk’s tech advances.

“Accessibility to bookings has enabled this transition,” McNelly wrote.

Alphaliner speculated in its latest weekly report published today that the series of Maersk announcements yesterday affecting subsidiaries Hamburg Sud, Damco and Safmarine could lead to a total of 3,400 redundancies.

SeaIntelligence’s Jensen – a long-term proponent of liner consolidation – looked at a top 20 carrier list from 1980, observing that there are now just five brands that remain in the top 20 forty years on: Hapag-Lloyd, Maersk, Evergreen, ZIM and Yang Ming.

The 20 largest lines controlled 40% of the global capacity 40 years ago. The 20 largest lines today control 93%, Jensen pointed out.

The assimilation of the Damco brand into the Maersk empire has also attracted plenty of comment over the last 24 hours. 

Saskia Groen-in’t-Woud, Damco’s CEO, wrote yesterday: “In integrating the Ocean LCL and Air freight products into Maersk and to wind down the NVOCC Ocean volumes and ultimately end the brand, we are speaking to the true heart of customer needs and the integrator strategy.”

She went to stress that the decision speaks strongly to where Maersk is going in terms of “simplifying and connecting” logistics for its customers. 

Zvi Schreiber, CEO and founder of online freight platform Freightos, commented via LinkedIn that with carriers such as Maersk and CMA CGM invading the freight forwarder space, liner characteristics are changing rapidly. 

“The industry has new shades of grey, blurring the carriers / 3PLs distinction, as Maersk replicates Dell’s direct computer sales move in a far larger industry,” Schreiber opined. 

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Comments

  1. Lars Jensen seems to be forgetting that Maersk has resurrected the SEALAND brand name as an expedient to cover its short-sea traffic……
    As for the Crocs lady, Maersk tried to eliminate the Safmarine brand soon after they acquired it but were reminded by the South African shippers (particularly reefer exporters) that they would boycot Maersk if Safmarine did not stay. Digital may have a little to do with the new attempt to remove the name but it is more likely a gradual softening of resilience on the marketing side that can get this one done now.

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