News / TPM24: US growth 'impossible' without Maersk as an integrator, says shipper

Maersk’s integrator strategy has had a big thumbs-up from Singaporean home goods manufacturer Castlery.

At S&P’s TPM24 in Long Beach, its VP of operations, Yao Zhang, said Castlery had “benefited tremendously in [its] growth” from partnership with Maersk, which services its US logistics.

Mr Zhang also revealed that sharing values and holding the global integrator “tightly” accountable were key to the collaboration.

He was joined on the platform by Maersk global client manager Elizabeth Hemann, who said an integrated strategy had been “paramount to working together”.

Maersk’s acquisitions over the past few years — including Performance Team in 2020, which doubled its North American warehouse portfolio — had enabled it to meet Castlery’s needs.

“We could never have done this without acquiring the space,” she admitted.

Castlery, which entered the US market a few months before the pandemic, commissioned Maersk to “release bottlenecks in its logistics network” that were causing growth to slow.

According to Mr Zhang, due to bulkiness, furniture logistics is particularly challenging. He said: “90% of our products can’t be delivered by FedEx or UPS because of the size and weight restriction.”

Aided by Maersk’s supply chain strategy team, his company began using sites in New Jersey, later expanding to Savannah, Georgia and, most recently, setting up in Long Beach.

Over the past two years, growth has accelerated – an outcome, he said, that would have been “impossible without Maersk”.

Castlery now aims to double its US distribution centres to six by the end of this year, with a further four planned for “the coming two-to-three years”.

Mr Zhang ascribed the successful partnership to “culture alignment”, echoing Ms Hemann’s observation that both companies are “customer-centric, committed to sustainability and active pursuers of supply chain integration”.

He further highlighted the sheer scale of Maersk as a benefit, recalling an instance the Danes were able to provide additional space for its products when his team under-forecasted Asia-to-US volumes.

Perhaps triggered by the syrupy tone of proceedings, one audience member posed some hard-hitters: “How much more does it cost to use the Maersk integrator service compared with handling it yourself? Won’t they raise their prices as you become more dependent on them?”

“You never negotiated with Yao”, Ms Henanne observed, wryly.

Mr Zhang said his company had been negotiating rates carefully. Castlery was in a good position to do so, he explained, because it runs its own warehouses and deliveries in Singapore and elsewhere in Asia. Knowledge of the cost structure thus allowed it to hold Maersk accountable for any raises.

As for “going it alone”, he claimed that wasn’t an option due to the company’s rapid growth — 30% year over year in 2023, “and that was a very conservative year”.

But he admitted that Maersk’s warehouse layouts weren’t quite as well-suited to furniture storage as Castlery’s Singapore sites. But that was inevitable, he argued, because Maersk wasn’t a specialist and had to cater for a diverse customer base.

Fortunately, the problem could be solved, he said, revealing that he had recently invited the Maersk team to Castlery’s warehouse in Asia.

“They took a lot of photos, a lot of videos, and then they sent that back to their teams in California and New Jersey. And yesterday, when our team went to the California warehouse, we already saw a lot of improvement on how they utilise the warehouse.”