Danish shipping and logistics giant, Maersk, has said that increasing volatility in global supply chains means shipping lines must undergo a radical restructuring to survive and that “the way that supply chains have operated over the last number of decades is no longer fit for purpose”.
According to the company’s Asia-Pacific President, Ditlev Blicher, while shipping lines have being trying to streamline their operations, they still haven’t been able to overcome the bottlenecks that arise from thousands of players acting in individual slices all along the supply chain.
Blicher said it’s become more pressing to invest in smarter technology and logistics networks that extend beyond adding shipping capacity.
Accordingly, Maersk is now working on a strategy that would see it have warehouses scattered across different ports, allowing them to consolidate shipments originating from different parts of Asia at a convenient hub, giving more flexibility to send them to where demand is the greatest.
Maersk’s new strategy follows the announcement last month that its alliance with Mediterranean Shipping Co would end in 2025. It seems that the two companies disagree on the what the future of trade will look like and with opposing priorities, are disbanding the ‘2M’ alliance to “pursue their individual strategies”.
Commenting on Maersk’s new strategy to become a one-stop shop for logistics, Andy Dobson, Generator’s Lean Operations & Supply Chain specialist, has reservations about how Maersk will make it work:
“In ‘warehousing’ their customers’ products they are adding costs and time to the operation. Will customers accept an increase in lead time while their product sits around on a dock? Customers are unlikely to accept increased costs for this!”
Andy also questions whether this new strategy will be enough to compete with the movement to nearshore or onshore supply chains:
“As a shipping company, of course they want to move lots of goods around the planet but increasingly companies are looking to nearshore or onshore their supply chain in order to reduce dependency on China. To some extent there will be less demand for global shipping in the future.”
But if Maersk’s strategy is to fulfil more of the stages along the supply chain then they could see themselves just taking a bigger slice of companies’ logistics spend.
Meanwhile, MSC’s strategy has announced its strategy to aggressively expand its fleet, gaining market share in Ocean. If nearshoring and onshoring turn out to be bad business and global supply chains remain centred around China, MSC’s doubled-down bet on shipping could be the right move.
If you’re looking to streamline your supply chain, book a call with a member of the Generator team.
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