Predictability in Logistics is Maersk’s New Integrated OfferingBy Andrea Villar | Thu, 06/17/2021 - 05:00
Q: What does the company’s decision to prioritize customer demand for integrated logistics mean for your client base in Mexico?
A: Maersk is well-positioned to help Mexico’s growing manufacturing base and provide last-mile delivery services as companies look at the possibility of moving their plants to Mexico from Asian countries. If this happens, we are also likely to see a massive influx of raw materials to assemble such goods.
Q: Maersk is moving from offering a short-term transactional solution to becoming long-term value-based. How has this impacted your service with clients in Mexico?
A: Changing from a short-term to a long-term vision has proven to be highly positive for our business and for clients. There are multiple positive impacts for our customers, who need predictable and reliable services worldwide at fixed long-term contract prices during challenging times, like that which we have been experiencing. As a part of this, we also continue to expand our land logistics, offering services from last-mile to customs house brokerage, warehousing, depot, finance and other supply chain management solutions.
In the digital sphere, we are ramping up our offering of products and giving big companies the opportunity to have real-time information, which allows them to make better-informed decisions, mitigate impacts on deliveries and boost performance. Using artificial intelligence, our NeoNav solution helps companies to reduce inventory by up to 30 percent, increase revenue by 1 percent, lower costs of goods sold by up to 2 percent and cut costs by up to US$30 per container. This is a big deal if you are a company moving more than 50,000 containers a year. We are talking about multimillion-dollar savings; the bigger the volumes, the bigger the benefits and savings.
Q: What other value propositions set Maersk apart from its competitors?
A: Maersk is accelerating its transformation worldwide, delivering on a long-term vision of becoming a fully integrated land, sea and air logistics company. We are known for our shipping prowess and global maritime leadership; however, Maersk is already leveraging its expertise and scale to invest in land logistics and services opportunities. For Mexico, we are already advanced in regard to our land logistics offering of services but we are looking at more opportunities. Ultimately, we are working toward helping our customers find smarter, more cost-effective and consequently more sustainable supply chain solutions to support recovery across multiple Mexican industries this year.
Q: What were the best practices that helped Maersk to weather the pandemic and what lessons did you learn from it?
A: We are always guided by our values and goals in everything that we do. Mexican trade has its challenges but we are adding value by increasing our land logistics services. The pandemic has accelerated this transformation of providing more land logistics services. Becoming an integrated logistics company provides more predictability and stability for our clients at a challenging time for world supply chains. The one-stop-shop solution is what customers want. They want us to enable trade and they want trade to be simplified. Therefore, we are offering our expertise through services such as global supply chain management, for example, as well as providing digital tools such as NeoNav, Maersk Spot, Hamburg Süd Instant and Captain Peter. Digital is really making a difference in providing transparency and boosting reliability for clients too.
Q: How long are you expecting to feel the repercussions of the Suez Canal blockage?
A: Maersk has been working around the clock to mitigate the impact of the pandemic and the Suez Canal blockage. The current situation is expected to continue for the global logistics industry until the end of 2021. The bigger underlying challenge facing logistics worldwide is more historic, however. When the pandemic hit, there was an already existing shortage of containers that just became more acute. The pandemic slowed new container production dramatically. Worldwide container production dropped 40 percent in the first half of 2020 compared with the same period in 2019 due to the COVID-19 crisis.
On top of this, port operations have been moving more slowly during the pandemic because fewer people can work at the ports at the same time. We know and advocate for the safety of all first. The Suez Canal blockage is the latest in a series of events surrounding the availability of containers worldwide. It is too early to say how this situation will impact Mexico. We know it will lead to port congestion in Europe. What we know right now is that shipping lines are busy repositioning their container inventories to mitigate the impact on local companies and producers. The good news is that the Suez blockage was temporary, it was resolved sooner than expected and the goal is to focus on normalizing trade flows again.
Q: What has been the impact of container price surges on Maersk’s business?
A: Maersk has US$7 billion to invest around the world in 2021 and we will be looking for opportunities at the right price and conditions that make sense to our growth ambitions of becoming a top and fully integrated global logistics company. As part of this, Maersk continues to invest in digital solutions to make supply chains, smarter, more competitive and easier to use for customers worldwide.
Q: What are the major needs of the Mexican business community right now in terms of logistics and how does Maersk contribute to solving them?
A: We are customizing supply chains for our clients and increasing the number of points that we offer across Mexico with storage and distribution solutions in the ports of Manzanillo, Lazaro Cardenas, Altamira and Veracruz, and the inland cities of Leon and Mexico City.
We know that our customers need services with high reliability and a sense of agility that goes along with their growth and constant changes. With our wide portfolio of services, we are providing integrated solutions to their supply chains, becoming a business partner, providing accuracy while delivering broad, real-time information to help our customers make logistics more predictable. An example of how we can adapt to today's needs is our transload offer that allows clients to reach a less congested port and then cross the border to reach their destination.
Q: Maersk is accelerating plans for the world’s first vessel powered by carbon-neutral fuel. What impact will that have on cost and on the attractiveness of Maersk’s service?
A: Maersk has a long-term goal of establishing a carbon-neutral fuel value chain. The plan to christen the ship in 2023 will come seven years earlier than we had initially and ambitiously planned. However, this is a collaborative effort. The success of sourcing carbon-neutral fuel relies also on the contribution from our customers to embrace these new products, as well as technology partners, developers, and authorities to ramp up production and approval processes fast enough. The extra cost for the vessel’s carbon-neutral propulsion option is manageable and included in existing CAPEX plans. The carbon-neutral fuels very likely come with a cost increase, which we rely on our customers to accept as a reasonable premium for an innovative, properly carbon-neutral product.
Q: What opportunities and trends do you see and want to explore in the logistics industry in Mexico?
A: We expect Mexico to play a critically important role in our regional near-sourcing strategy, and strong east-west and north-south coverage through Hamburg Süd, Maersk and Sealand. On top of this, Maersk Mexico is leading e-commerce logistics in Latin America for the group as Mexico is uniquely placed. We are in the process of a digital transformation, reaching and supporting thousands of companies, but there are still many opportunities to grow our online business in 2021. Ultimately, we will continue to look out for investment opportunities that make sense to our business under the right conditions.
Q: What is your outlook for the market this year?
A: For Maersk, we see 5 percent to 7 percent total trade growth worldwide. Export volumes growth out of China to the US are expected to drive global trade in 2021. Mexico is going to benefit from such growth. For this year, we see total trade volume expanding 3 percent, aligned with the growth of the market. Never has logistics had such an important role in society as it does now. The transport of goods cannot stop in these challenging times. The current exceptional market situation is expected to continue until the end of the year as consumers affected by the pandemic are choosing to buy more goods than before as opposed to spending time and money on services such as eating out in a restaurant or tourism.
Maersk is an integrated container logistics company and member of the A.P. Moller Group. The company is the world’s largest container shipping line and vessel operator.