Maersk Shipping is the world's largest container transportation company. Due to the sluggish industry, Maersk Shipping, which made a profit of $1.3 billion in 2015, lost $384 million in 2016. On February 13th, Fang Xuegang, President of Maersk Shipping Greater China, announced in Shanghai that Maersk Shipping's actual profit for 2017 will increase by more than $1 billion compared to 2016. How to achieve it? Fang Xuegang revealed that Maersk Shipping will once again change the industry's game rules.
2016 was a challenging year, and even the world's largest container shipping company, such as Maersk Shipping, faced challenges. According to Maersk Group's 2016 full year financial report released on February 8th, its subsidiary Maersk Shipping reported a profit loss of $376 million in 2016 (a profit of $1.3 billion in 2015), and a negative return on investment capital of 1.9% (6.5% in 2015).
In 2016, the market environment was sluggish and freight rates continued to decline, but the increase in cargo volume and the decline in fuel prices led to a decrease in single container costs, an increase in ship loading rates and cost efficiency. Maersk Group stated in its financial report that due to the combined impact of these factors, Maersk Shipping suffered an actual profit loss of $384 million (2015 profit of $1.3 billion).
In the first half of 2016, the growth in demand for freight transportation was lower than expected, resulting in significant downward pressure on freight rates. In the second half of 2016, especially in the fourth quarter, the market improved, demand increased, and new capacity investment slowed down, resulting in a rebound in freight rates. However, according to Fang Xuegang, President of Maersk Shipping Greater China, on February 13th in Shanghai, the average freight rate in 2016 decreased by 19% compared to 2015, which is the main reason for the losses.
Maersk Shipping's performance is considered good. In 2016, the performance of peers was generally lower than that of Maersk Shipping. South Korea's Hanjin Shipping Company, also a major container shipping company, suddenly died in 2016, becoming the largest bankruptcy case in the global shipping industry.
In the future, we cannot retract at will
Since the global financial crisis, Maersk Shipping has been the first in the industry to adopt new methods and models, conducting many explorations, continuously implementing cost saving strategies, striving to attract customers, and significantly increasing market share.
The first choice for customers now is who has the best financial status, because such shipping companies are reliable. "Fang Xuegang introduced that the consequences of low freight rates are unstable supply chains, and if shipping companies cannot sustain themselves, it is still the customers who are unlucky. It is possible for goods to accumulate and even cannot be found.
Maersk Shipping is a bit like SF Express in the domestic express delivery industry, with relatively high prices and good service. We need to continue to improve the customer experience. In 2015, when customers shipped a cabinet, they had to contact us 5 times, but now they only need to contact us 2 times, which is much more convenient. "Fang Xuegang hopes that in the end, like on Taobao, customers can place orders, pay, complete transactions, and ship with just a click on the relevant page on their computer." By using digital products, logistics costs can be reduced
Maersk Shipping will engage in deeper interest bundling with customers, and is expected to take the lead in changing a game rule in the industry this year to achieve a win-win situation for both parties. Now, after customers book cabins and containers, there is no binding force. If they want to cancel, they will cancel it. About 30% -40% of the orders are so without any further information, which is not conducive to the allocation of shipping capacity by shipping companies, forming a vicious cycle. "Fang Xuegang revealed that Maersk Shipping will charge customers a deposit, and the return that customers will receive is to ensure that there is space and capacity. Either party shall bear responsibility for breach of contract.
Some shipping experts pointed out that due to the sluggish market, shipping companies generally do not require a deposit for old customers to book cabins and containers. After completing the goods and boarding the ship, they settle the settlement uniformly. "For new customers, it is different to charge a lower deposit to prevent risks. There are indeed many cases of customers abandoning cabins and containers at will, which needs to be addressed
Fang Xuegang also pointed out that Maersk Shipping's optimistic forecast for 2017 performance is based on evidence. For example, 80% of China's import and export trade requires container shipping. The goods are already diverse, and fresh goods that require refrigerated transportation increase by 20% -30% annually, bringing considerable benefits to shipping companies. We ship beef and milk from Australia and New Zealand, salmon and seafood from Norway, and fruits from the United States. Even in 2016, when the market was sluggish, Maersk Shipping's cargo volume increased by 9.4%.