The “Little” Willfulness of Marsek

Reporter Xu Hua

The large-scale vessel market led by Maersk has been surging for years. However, at this junction, Maersk declared that they are planning to order small size ships. What hides behind this?

Professor Xu JianHua from Shanghai Maritime University considered that the scale economy of largescale vessel is mostly represented by the reduction in unit cost, of which, the fuel cost is the most important component, accounting for more than 60%. With the cost of oil price decreasing, fuel cost in unit volume has decreased, accounting for only 40% of the total cost.So, it is not that urgent to control cost and therefore not necessary to build containership of 18000 TEU.

The other possibility of building small-sized ship is the choice of feeder vessel. There must be an appropriate proportion of the branch and main line for any liner company. At present,there is no specific data to study. It can only be assumed that Maersk is going to strike a balance in its fleet structure, and in the future, it is possible that it will build large-scale containership of more than 10000 TEU and also feeder ship of 5000 TEU.

Maersk is always making its voice heard in the market,its action always attracts the public attention and speculation. What is its advantage over the others?

It is an old subject, there is always curiosity about the secret of success of the powerful people. Some media stated that as curious as most other leaders in the industry. Mr. Xie Zhijian, the Chairman of Evergreen is still wondering why Maersk could operate with such an enormous profit while many line companies were declaring loss. Mr.Xie said: “we have been working hard to analyze and evaluate the reasons of Maersk" success in order to develop our own strategic plan.”

Professor Xu Jianhua indicates that Maersk took the measure of ordering big ships, establishing alliance,strengthening capacity management, controlling costs and providing “Daily Maersk” services, most of which have also been adopted by the other carriers, and it is impossible that all of them are blind imitators. But why these measures don"t work for them? Because these measures are based on management structures,enterprise culture, staff quality, decision-making procedures, exception management, crisis handling and other management factors, a minor difference of which will lead to “copy failure”. What is more important is that outsiders cannot understand these factors well.Professor Xu points out that there are two reasons for Maersks success: system and people. Same as OOCL and Evergreen Marine, Maersk is a family enterprise,though it is a modern corporate enterprise that conforms with regulations or even a listed company. In turbulent container transportation industry, family enterprises make decisions more quickly in most cases. In addition, family enterprises always make long-term plans and avoid shortterm demands of external investors.

Secondly, it is capable of identifying talents. Private enterprises often make quick decisions, however right decisions depend on right decision makers. All of Maersks CEOs are excellent. They have strong decision and implementation power, even if they are not shipping people. Soeren, the incumbent CEO of Maersk, has been the previous CEO of Carlsberg Beer. In the year of 2011, the former CEO of Maersk made price war with Mediterranean Shipping, which caused destruction to both sides. Soeren stopped this war and contacted with rich second generations of CMA CGM and MSC. In 2013,P3 Alliance Plan was proposed. It can be seen that senior managers are very important. As a contrast, APL, the industry leader in 1990s, begun to lose money after it was purchased by NSSPL. This is related to the use of people.It is the advisor appointed by the government rather than the professional manager who manages the company and that is the primary cause of APL"s failure.