Maersk read­ies for China’s emerg­ing mar­kets

China Daily (Canada) - - BUSINESS - By ZHONG­NAN zhong­nan@chi­nadaily.com.cn

Maersk Line, the ship­ping unit ofDen­mark’sMaersk ship­ping and oil con­glom­er­ate, is speed­ing up plans to of­fer a wider range of ser­vices in China be­cause more Chi­nese com­pa­nies are keen to move to emerg­ing mar­kets to ben­e­fit from boom­ing bi­lat­eral trade, pref­er­en­tial trade tar­iffs and in­vest­ment op­por­tu­ni­ties.

Jens Eskelund, man­ag­ing di­rec­tor ofMaersk China, said China will con­tinue to grow. But the coun­try will also change, and one of the most im­por­tant changes is the com­po­si­tion of its for­eign trade. Growth in trade with ma­ture mar­kets in the United States and Euro­pean Union is mod­est, while trade with new­mar­kets in Africa and South Amer­ica is surg­ing.

In Africa, Maersk Group’s lo­gis­tics arm, Damco, is part­ner­ing with a ma­jor Chi­nese petroleum com­pany to ex­pand the African mar­ket. Be­cause it needs to send large ma­chin­ery and equip­ment from China to plants in Africa, Damco is putting a strong em­pha­sis on timely de­liv­er­ies and prod­uct se­cu­rity with zero dam­age to the cargo.

More than 30 per­cent of the African pop­u­la­tion is land­locked, and sta­tis­tics show that ru­ral Africa has on aver­age only 34 per­cent road ac­cess com­pared with 90 per­cent in the rest of the world, ac­cord­ing to a re­port by the cen­ter for African stud­ies at Pek­ing Univer­sity re­leased last year.

“The African ports that re­ceive in­ter­na­tional car­ri­ers are of a higher stan­dard, but the han­dling ca­pac­ity of heavy equip­ment is rel­a­tively limited. Cranes at the ports­may not be able to han­dle lift­ing more than 50 met­ric tons. It may take more than a week to ar­range trans­port of a lifter from the east­ern re­gion to a port on the western coast,” Eskelund said.

The Dan­ish com­pany has built in­land container de­pots to re­duce con­ges­tion lev­els at the ter­mi­nals in cer­tain places and de­ployed Chi­nese speak­ing staff in key des­ti­na­tions in Africa to co­or­di­nate with lo­cal teams and check all the ar­range­ments be­fore a ship­ment ar­rives.

Maersk Line’s con­trol desk at the ori­gin can also close­ly­mon­i­tor prepa­ra­tions in Africa. Backup ar­range­ments such as trucks and cranes can be ar­ranged in ad­vance to en­sure MAERSK LINE'S NET PROFIT AND LOSSES, 2010-2013 seam­less trans­porta­tion at the des­ti­na­tion.

De­spite be­ing chal­lenged by a still weak global ship­ping mar­ket, Maersk Line achieved a profit of $1.5 bil­lion from the world mar­ket in 2013, up from $461 mil­lion a year ear­lier, thanks to ves­sel net­work ef­fi­cien­cies and lower bunker prices.

Large Chi­nese ship­ping com­pa­nies such as China Ship­ping Container Lines Co and China Mer­chant En­ergy Ship­ping Co re­ported a net loss of 2.65 bil­lion yuan and 2.18 bil­lion yuan re­spec­tively in March. Chang Jiang Ship­ping Group Phoenix Co, an­other large Chi­nese ship­ping com­pany, is highly likely to be delisted from the Shen­zhen Stock Ex­change this year af­ter suf­fer­ing losses for three con­sec­u­tive years.

“Re­gard­ing container trans­porta­tion, we be­lieve the cur­rent fo­cus on be­com­ing an in­creas­ingly con­sump­tion­driven econ­omy holds great po­ten­tial for our in­dus­try,” Eskelund said

“While trade growth in China to­day may no longer reach the dou­ble-digit per­cent­age lev­els of past years, trade growth in ab­so­lute terms will still be sig­nif­i­cant.”

Maersk Line, Mediter­ranean Ship­ping Co SA of Switzer­land and French car­rier CMA CGM SA agreed last year to es­tab­lish a long-term op­er­a­tional al­liance on East-West routes to op­ti­mize re­sources and lower the cost of container ship­ping. Known as the P3 Net­work, it is planned to start op­er­at­ing in the sec­ond quar­ter of 2014 if ap­proval is ob­tained.

Luo Ren­jian, a re­searcher at the in­sti­tute of trans­porta­tion re­search un­der China’s Na­tional De­vel­op­ment and Re­form Com­mis­sion, said it is not un­usual for ma­jor in­ter­na­tional ship­pers to form a big­ger union un­der to­day’s global trade en­vi­ron­ment be­cause oth­ers are dom­i­nated by large al­liances such as CKYHE and G6 in the world mar­ket, which were formed in 2005 and 2011, re­spec­tively.

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