Maersk Group, the parent company of the world’s largest shipper Maersk Line, announced a major restructuring that will divide the company into two new businesses, in an effort to cut $600 million a year in costs.
Maersk Line and its sister company APM Terminals will be merged as the Maersk Group seeks ways to ride out the current downturn in the global shipping industry.
In a highly anticipated announcement, the company said a restructured Maersk Group will see closer cooperation between Maersk Line, logistics provider Damco, and APM Terminals as the group becomes what CEO Soren Skou described as “an integrated transport and logistics company.”
Maersk Group will be reorganized into two separate divisions, with the split expected to deliver cost savings of around $600 million over the next three years.
Skou will lead a new Transport and Logistics division, which will comprise Maersk Line, APM Terminals, Damco,
Spitzer, and Maersk Container Industry. The Energy division will consist of Maersk Oil, Maersk Drilling, Maersk
Tankers, and Maersk Supply Services and will be headed by Claus Hemmingsen, who is also group Vice CEO, the company announced from its Copenhagen head office Thursday.
Maersk Group Chairman Michael Pram Rasmussen announced the restructuring plan on June 23, the same day CEO Nils Andersen was removed and Skou installed at the top of the Danish carrier, but no details of the eventual decision were given until this week.
It comes as the container shipping industry tries to navigate enormous financial headwinds as excess capacity and weak demand erode profitability. In its latest report, shipping services and consulting firm Drewry estimated the industry would make a collective loss of more than $5 billion this year.
Skou said Maersk Line “would focus on gaining market share organically and consolidation through acquisitions would be considered, provided they created value. He did not mention any potential acquisition targets,
although market rumors have linked Maersk to takeovers of Hyundai Merchant Marine, with whom Maersk has recently negotiated an alliance, and Japan’s “K” Line.
“We need to be able to grow market share organically and we will also consider acquisitions if the right opportunities develop,” he told reporters and analysts.