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Forwarders in the firing line

Bjorn Vang Jensen, vice president at Sea-Intelligence Advisory Services, on what he terms Maersk’s ‘burn the boats’ strategy, and its application in the wider supply chain.

Reports last week that forwarders fear being shut-out as global carriers try to copy’s Maersk’s strategy to focus on large forwarders and BCOs come as little surprise.

This was a very predictable twist of events if you are an outside observer. So predictable that it feels like watching a train wreck in slow-motion.

It gives rise to some very interesting discussions which are sure to divide the waters, as it were.

It seems clear that Maersk is pursuing a ‘burn the boats’ strategy, making retreat impossible. The company is really putting it all on red, but they have the muscle, the money, and the replacement product to do so (in itself a work in progress, but sort of, anyway), at least for the foreseeable future.

Will Maersk expand this scorched-earth strategy to medium-sized forwarders next?

But does that mean that they risk alienating not just the forwarders who are left out, but also the customers of said forwarders, who know very well whom their cargo is shipped with, and who will therefore also be left hanging – unless they want to put it all on red as well and let Maersk be their sole service provider?

I have heard from several such customers that they resent what they feel is like having a gun put to their head, and are considering their options and exploring alternatives. This suggests that there is a weakness in the strategy which Maersk may or may not have considered.

Will Maersk expand this scorched-earth strategy to medium-sized forwarders next, or is that perhaps already happening below the radar ?

Rumors are rife that both medium, and even very large ones, are either seeing this, or are taking pre-emptive measures in anticipation of it happening.

On the flip side, and this is a VERY important, almost existential, question: does Maersk owe small forwarders (or anyone else, for that matter) a living?

Of course not!

It’s up to Maersk to set its own strategy, and to live or die by it. Many carriers have for years de-selected various customer segments in direct-BCO sales, usually using the same tactic of offering rates they know can not possibly be accepted by the BCOs in question, as an easy ‘out’. Now they’re just expanding the circle.

There are even very credible examples of how not just Maersk but many other carriers are doing the same to very, very large shippers, suggesting that we are no longer necessarily in “volume is your friend” territory.

If there is one industry where loyalty has never counted for much, and where this year’s mortal enemies become next year’s best friends, then surely it is container shipping. That’s one of the reasons I have always disliked and discouraged the use of the word, “partnership”.

If there is one industry where loyalty has never counted for much, surely it’s container shipping

This opinion is highly likely to attract a firestorm of angry comments along the lines of, “we stood by them when they were begging for cargo, and this is the thanks we get”, or variations on that theme.

But is that really true? Really? You’re telling me with a straight face that, whether you’re a BCO or a freight forwarder, you didn’t take the opportunity to squeeze that lemon in return for ”standing by them”, while playing both ends against the middle? Be honest, you already know the answer.

Me, I plead guilty. And I will never apologise for it, because that’s partly what I got paid to do. But I also didn’t moan when the serve was returned.

In the broader supply chain, that dynamic of making conscious choices on whom you want to trade with also exists between manufacturers and suppliers (both ways), and between manufacturers and retailers (also both ways). Why does that right to determine your own future change just because the customers targeted are now small freight forwarders, who have a louder voice and a larger platform ?

And how many of those have salespeople out there trying to convince potential customers that they should be part of the customer’s resilience strategy, while their own business model apparently stands or falls with the ability to work with a single market player ?

And now if you’ll excuse me, I’m going to go put on my flame-retardant suit.


  1. It is highly unlikely that all the shipping lines will embrace the same strategy.
    In any case, if that happens, what do you think that forwarders should do, given the narrower and increasingly limited field they are forced to play in?

    1. Just like an elephant cannot dictate what rabbits and squirrels should do in a jungle, Maersk cannot dictate globally what freight forwarders should do.

      Ideally all the freight forwaders should form a consortium, an association and ban Maersk for next 5 years. While it wont immediately benefit them and may cause to lose some of customers as well but in long run Maersk cannot sustain this policy. Their logistics division is their biggest weakness. They have got SaleaForce after 15 years as their new CRM tool. Their existing GCSS and MARS still donot ensure proper billing. This IT issue has been living in with Maersk for decades and recent data hacking by Korea proves that customer data is vulnerable with Maersk.

      They might have reported USD16 bn profit this year the day is not far when they woukd report USD6 bn loss and it would mark the ending of Maersk in Shipping Industry. Only time is awaited to see it. Even their government wont be able to support the organisation after disintegration of Europe.

  2. I suppose I am a neutral observer and yet I do not consider Maersk’s ploy as predictable in any way (unless the implication is that the company’s perceived arrogance is the explanation for their direction). In spite of the near oligopoly in liner shipping, there are still enough choices to be able to exclude Maersk from a shipping strategy (even for Scandinavians).
    Today the sun may be shining on the container boys but those of us with longer experience of liner shipping will recall some desperate times, when freight rates were scrapped over like a pack of hungry stray dogs over a bone and pricing was in a downward spiral. Those days seem far off now but new tonnage is going to arrive in spades in 18 months from now, so who knows what consumer demand and inflationary pressures will bring?
    Liner shipping has been through cycles of centralisation and decentralisation and from vertical to horizontal integration and back again, in-sourcing and then out-sourcing. One thing that is central to all these phases of business development is the customer and it does not end well when you set out to alienate the customers who have ‘supported’ you. That ‘love:hate’ relationship is what makes the shipping world go around and, even though shipping lines often resent freight forwarders, they are also seen as a necessary evil.
    Maersk has stumbled along a path of buying, absorbing and liquidating various participations to gain greater cargo control and probably thinks it can do better this time because of better digital capabilities, analytics, AI, BI, Blockchain or any other buzz words, but it still comes down to people and human insight. If Maersk thinks its path to world domination revolves around binary sequences then they may find they have taken one step forwards and two steps back.

    1. Maersk is ruling the roost now. In retail markets distributors are necessary evil and many firms have succeeded in eliminating the middle man. Many shipping lines will deploy digital tools to go for direct customers. Ultimately customers would benefit. But smaller liners will go freight forwarders

  3. It’s simple enough. They decided they wanted to compete with Amazon freight forwarders, get in the way because they are the middlemen. By offering a direct product and being able to store it and ship it even final mile they have a chance at directly competing with Amazon in the next couple of years. That being said they are still in alliance I don’t think they’re going to get out of the alliance until they believe they can directly compete with Amazon and see Amazon profits. So book with MSC 50% of the cargo will still end up on Maersk ships anyhow because it’s in alliance and they have to provide the capacity. And all things being equal they almost have equal capacity. No one’s going to pay Maersk spot rate prices if you’re forwarder. And no individual at this point time is going to book with them and only received a spot rate. Maersk just got to fire all of their salespeople. As to the future, there is nothing preventing the small freight forwarders who understand international shipping to build ships and form a consortium of their own.

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