Mærsk – the 'ideal buyer' of DB Schenker
‘A super-large Damco (rebirth)’
Maersk Line and Damco have clearly not been reading the script: over the past few years it has been the forwarder that made the profit and the carrier that posted red figures, not the other way round.
And as Maersk Line stole the limelight yesterday in AP Møller Maersk’s annual report, contributing $1.5bn of its $3.8bn net profit for 2013, sickly Damco posted a loss of $111m after what had clearly been a very disappointing year for the logistics arm.
The negative contribution from Damco is obviously a thorn in the side of APMM, but at the post-results Q&A session, group CEO Nils Andersen played down the result from “the small business unit” in the context of the stellar performances in other sectors.
He added, however, that beside the one-off costs impacting Damco’s bottom line, the forwarder had “faced a lot of challenges in its daily operation” and he did not expect to see an improved situation until the second half of 2014.
Mr Andersen batted away a tricky question about the patience APMM would extend to Damco to allow it to put its house in order, and when asked: “Do you think you are the right owner for Damco?”, he replied in the affirmative, but admitted things had not gone very well in 2013 for Damco, suggesting that there had been a loss of focus on daily costs in what he said was a wafer-thin margin business.
The move of the headquarters from Copenhagen to the Hague in February 2013 under the leadership of Rolf Habben-Jansen, who left Damco earlier this year to take up the chair of Hapag-Lloyd, was problematic for the logistics company. It has been fighting for business, and to keep existing business, in a dog-eat-dog freight forwarding market dominated by the likes of Kuehne + Nagel, DHL, DB Schenker and Panalpina, while at the same time losing key staff in the relocation.
Given that Damco posted a $8m loss in Q2 13 and a $1m profit in Q3, the full-year loss of $111m means that not only were restructuring costs much higher than anticipated, but that the costs were understated in earlier quarters.
This is all far removed from the optimism of Mr Habben-Jansen prior to the move to the Netherlands, who said the relocation would put Damco “closer to many of our customers” and within the catchment area to recruit new logistics talent.
Putting Damco back on track is perhaps one of the biggest challenges for Maersk’s troubleshooting new CEO, Hanne Sorensen, who nevertheless will have the support of Mr Andersen and other key seniors in Copenhagen who will recall that not too many years ago Maersk Line was the bête noire of the group.
Expeditors sues long-term client for unpaid $20m in row over invoices
More bad news for carriers hoping rates decline has bottomed-out
Rivals set out to woo UPS customers as fears of a strike grow
Rate erosion may be easing, but rock-bottom prices are 'not good for anybody'
Drop 'DB' and 'DP'. Call it 'DHL Schenker'. Sounds cool, huh?
2M axes Asia-North Europe loop, as carriers shop for more tonnage
Taiwan carriers pay record staff bonuses after year of bumper profits
Airfreight rate relief for shippers, or are things going to 'turn nasty'?
Shippers put more pressure on ocean carriers for carbon-free services
Atlas Air merger with Apollo group finally set to close on Friday
Dachser's M&A in air and ocean freight – how serious is that?
Billund sees launch of Maersk Air China link – 'a start-up on steroids'
Comment on this article
Michael KusuplosFebruary 28, 2014 at 3:33 pm
Seems that the low hanging fruit is not as constantly sweet as the assumption thought it would be; that there are seasons where it is most bitter? Have business leaders not yet learned that there is no such thing as an “Easy Market or a “Guaranteed Profit”? Stray from your core business and you learn this very quickly.
Ethan BuchmanMarch 03, 2014 at 3:13 pm
This, together with the other article posted this week on losses at CEVA, only drive home the point that larger freight forwarders are operating inefficiently. For example, I requested spot quotes from the 15 largest freight forwarders and only got two answers in about a week.