Michael Hansen
Managing Director
Maersk Line Mexico
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View from the Top

Onshore Services Help Shipping Giant Stand Out

Wed, 10/21/2015 - 17:24

Q: To what do you attribute Maersk Line’s ability to remain the biggest container ship enterprise in the world?

A: We have been committed to the container business for many years. We were the first company to make serious investments in dedicated container ships in the 1970s. This line of business has evolved greatly but we used to have our own shipyard in Denmark, where we carried out a lot of R&D on container ships, thinking about how we could build them in the most cost-effective way. This led to us launching the world’s largest container ship in 2013, the Triple-E, standing for energy efficiency, economy of scale, and environmental friendliness. It can carry a full load of 18,000 containers and emits significantly fewer CO2 emissions than any existing container ships.

Over the last ten years, we have focused on making the industry more cost-effective and environmentally friendly. It is no secret that our industry pollutes a fair bit and that we burn heavy bunker fuel which makes our CO2 emission volume quite significant. Yet Maersk Line has invested a lot on consuming less fuel, building new ships that sail slower and more efficiently, and developing various technologies to make us more cost-efficient.

Honestly, we work in a commoditized business. Many companies are able to transport a container from Shanghai to Lazaro Cardenas, so it is difficult to differentiate between them. Maersk Line is able to distinguish itself due to its work on land. It is important for us to strengthen our onshore services as the industry has evolved to a point where container lines share their ships to improve cost-efficiency. In Mexico, we have about 100 colleagues serving our customers to ensure that their cargo arrives on time. Our land-based service gives our operations the necessary transparency so that clients can keep track of the location of their containers, their arrival date, and ensure that they arrive on time with all their contents. We are also seeking to differentiate ourselves by doing all our transactions online. The shipping business is very old-school, a lot of documents are handled through manual processes, which is we why we are becoming more automated and more standardized, applying one booking system to the whole world. This makes it easier to do business with us.

Q: How heavily are you involved in mining?

A: Maersk Line handles mining logistics for iron ore, primarily for the route between Lazaro Cardenas and Qingdao in China. Mexico is an import country so it imports many consumer goods from East Asia but typically sends nothing back. For us, sending an empty container back is just bad business, so sending these containers filled with iron ore is preferred, even if they do not generate much profit. In terms of our mining business today, we only handle iron ore. We have no other involvement with other minerals, even in Chile, which is the largest exporter of copper in the world. We do not engage much in that market, it is containerized but our competitors have got it covered. We have not gotten involved in it.

Q: What are the main challenges for companies looking to ship to and from Mexico?

A: In my experience, major conglomerates and big international companies are all fine. The likes of Walmart, Volkswagen, and Nissan have been here a long time, they can invest significantly in their companies, and this leads to good business in Mexico. SMEs, however, are scared of coming here. For example, European embassies are focused on supporting and encouraging SMEs to export their products to countries where doing business is easy and there is little corruption. As a consequence, Mexico is seen as being too much of a hassle and these firms prefer to go somewhere they feel the situation is more favorable. It is definitely true that Mexico presents significant obstacles for SMEs looking to come here. A large company can enter the country with the right structure and equipment and begin operating. Not all companies have those means and this is a challenge that Mexico has to address. So far, this has not been a problem for our group. We are making a fairly big investment in a new terminal at Lazaro Cardenas through our sister company, APM Terminals, but we believe in this market so we have no problem making it. However, if we were a medium-sized company it would be easier for us to invest in another market.

Q: How will the new container terminal at Lazaro Cardenas add value for your customers?

A: Firstly, it is important to stress that APM Terminals will be handling the operations there. It will only be our supplier if we decide to use it. We currently use another container terminal in Lazaro Cardenas. When the new terminal is up and running, we will make a commercial assessment of whether to keep using the terminal that we are using today, or switch to the new one. That is the same business model we use all over the world; we will only use a terminal if it is commercially competitive. Mexico has long been dependent on monopolies but it has now started to break these down, a development which will improve the competitiveness of the national economy over time. The new terminal will provide an alternative for Mexico, enabling it to increase its imports and exports to and from East Asia on its Pacific Coast. It will contribute to Mexico’s infrastructure development, which the country needs for roads, rails and ports.