The chief executive of the parent company of the world’s biggest container line has said that his company will ease investment in the container shipping business.
Nils Andersen, CEO of the A.P. Moller-Maersk Group, told the Financial Times
that the company will invest more heavily in its oil, drilling, and ports businesses
, and not as much in its container business Maersk Line.
The group is Denmark’s biggest company by revenue and an iconic name in the liner shipping business.
“We will move away from the shipping side of things and go towards the higher profit generators and more stable businesses,” Andersen said. “What we are going to do over the next five years, we are not going to invest significant amounts in Maersk Line. We have sufficient capacity to grow in line with the market.
“When we have taken that shift, probably more than 50 percent of our capital will be tied up in these three other businesses. Maersk Line will then account for 25-30 per cent of capital. We will have four businesses of almost equal size.”
Andersen’s comments should be viewed through the spectrum that Maersk is in the midst of investing billions of dollars in its fleet, primarily through the addition of 20 of what will be the largest containerships in operation.
The line has a roughly 16 percent global market share, but in recent months has signaled it is wary of the extreme volatility in the container shipping market since the start of the global economic downtown in four years ago. Maersk’s container business suffered a record loss in 2009, followed by a record profit in 2010, followed by another loss in 2011. In an earnings call earlier this month, the line said it expects to make a profit in 2012.
Andersen has laid out plans before to build Maersk’s other units into ones comparable to its container business, stressing that the company sees oil, drilling, and ports as the other three pillars of its success.
In truth, Maersk has been reaping huge profits from its oil business
even through the downturn as most of its competitors in the container business struggle with losses and strained cash flow. Its port business has also been a consistent profit maker, helping to offset some or all of the container line's operating losses in recent years. Both divisions also performed well in 2010 on top of the container business's record year.
But when new Maersk Line CEO Soren Skou took over earlier this year, he said he was intent on returning the line to profitability, rather than it keep dragging down group profitability in years when cargo demand was lean. - Eric Johnson