This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
The container shipping business has suffered from commoditization pressures leading to low margins, a cost to serve that went well above the investment in capital expenditures, and poor service that leaves customers dissatisfied.
At Maersk, we decided to take a different step forward, one that was based on our customers’ feedback and need for a partner that could deliver a more integrated, predictable, and customized service for them. With this in mind, we made a conscious decision not only to expand our logistics services, but also to improve reliability in our network, offer differentiated ocean products, and break the vicious cycle of overbookings and rollings by the introduction of digital products like Spot — to unlearn the behaviors that have led us to where we are today.
Starting with our long-term customers, we launched Maersk Contract — a new way of providing predictability and consistency based on customers’ supply chain demands. In this pre-defined three-tier allocation offering, customers can select the best ocean product for them: 1) a flat option for customers who require predictability in both price and allocation all year around, 2) a seasonal option for those who need flexibility for a part of their contract, and 3) an unlimited option for customers who need their cargo to be loaded as booked every time. For our short-term customers, we have introduced Spot, a digital product offering cargo loading guarantee at a fixed price upfront that’s available 24/7 online. We have seen a big difference in both performance and customer satisfaction when any of these ocean products are used.
Equally important, we are developing specialized products in both ocean and land, like Maersk Accelerate, an integrated express product between Maersk’s Warehousing & Distribution, APM Terminals, and Maersk’s ocean product with a commitment to deliver cargo to a customers’ facility in a 50-mile radius of the port within 48 hours of discharge. And, for vertical market segments such as retail, refrigerated, automotive, chemicals, lifestyle and technology, consumer goods, and other segments, we are building unique services that enable customers to better compete in tougher market conditions.
Through these and many more products, Maersk aims to improve the stability of our ocean product and, in turn, offer a strong foundation to provide more differentiated solution in ocean and land that can drive business value to all of our customers.