DAMCO TO MERGE FULLY INTO MAERSK WITH MAJOR HEADCOUNT REDUCTIONS RESULTING
Maersk announced two years that logistics unit Damco would merge with Maersk Line, renewing a focus on supply chain service offerings and A.P. Moller – Maersk appears to be continuing a significant reorganisation and it now appears that the company is pulling out of freight forwarding altogether.
In an announcement released on Tuesday morning (September 1), Maersk said that it would introduce “strategic changes that will further improve customer experience and end-to-end service delivery”. These include the termination of the Damco and Safmarine brands.
In the case of the Damco freight forwarding business, not only is the brand being dissolved but the business is being fundamentally changed. The company’s statement runs; “the integration of Air and LCL (less than container loads) into Maersk will help meet these needs and give businesses access to a simplified, connected and agile experience under the Maersk brand, as well as to its scale. Maersk uses its own assets to offer unique value propositions, hence it will not pursue the Ocean FCL Multi-carrier product (NVOCC) as a general offering.” Industry pundits believe that this means an effective end to the Damco freight forwarding business which was born from what was originally Maersk Logistics in 2013.
Vincent Clerc, CEO of Ocean & Logistics at Maersk commented, “businesses need Air and LCL products to connect their supply chains and with these offerings firmly placed in our global integrated portfolio, we aim to serve our businesses better and more efficiently across their supply chains”. This appears to mean that air freight forwarding and less than container load business will only be offered to customers of the wider shipping business which is being renamed Ocean & Logistics.
Slightly less traumatic is the integration of the Safmarine brand into the rest of Maersk liner operations. The Safmarine brand will no longer be used and the sales force will be integrated into Maersk Ocean. Something similar seems to be happening at Hamburg Sud, with that subsidiary saying that it will be “closer aligned with that of the parent brand Maersk” in the future.
Although not mentioned in the public statement from Maersk, press reports quote a “Maersk spokeswoman” saying “between 26,000 and 27,000 employees out of Maersk’s total headcount of 80,000 will be affected by the restructuring”. It is assumed that this will translate into 26,000 – 27,000 people losing their jobs although this has not yet been confirmed by Maersk.
Although announced as being measures around customer orientation, these changes seem to be more significant. Reducing staff costs by a third will of course have a significant impact on its margins as well but what this will end up meaning for shippers is perhaps too early to say.