Damco in new division after AP Moller-Maersk strategic reshuffle

22 / 09 / 2016

Danish maritime giant AP Moller-Maersk (APMM) has announced a strategic review of its business that will see its Damco logistics and forwarding arm placed within a newly created "Transport & Logistics division".

Damco, which handled 180,000 tonnes of airfreight in 2015, will be in the same division as the world’s number one container carrier, Maersk Line, the group’s box port arm APM Terminals, towage and sea support specialist Svitzer and ocean freight reefer box manufacturer Maersk Container Industry.

Damco, which also handled 2.9m (20ft container equivalents) last year, moved from an underlying $225m loss in 2014 to an underlying $15m profit in 2015 as its airfreight volumes fell by 4%.

“Productivity improvements, overhead cost reductions and growth in supply chain management activities were the primary drivers behind the improved result,” said APMM at the time.

Damco’s 2015 revenue was $2.7bn, down from $3.2bn in prior year, with the reduction largely caused by rate of exchange movements.

Announcing the major reshuffle of its core businesses, which also sees the creation of an energy division, APMM said that the mission of the Transport & Logistics businesses “is to enable and facilitate global supply chains and provide opportunities for our customers to trade globally”.

It continued: “Since 2008, the [parent] group has focused on building a lean transparent global conglomerate with each business unit operating on arm's-length principles.

“Managing and operating the business activities in Transport & Logistics in a more integrated manner will enable profitable growth through stronger collaboration and disciplined capital allocation.”

It added that the new division will rely on “three pillars to deliver long term profitable growth”, saying: “Product offering and customer experience will be improved based on the combined capabilities of Maersk Line, APM Terminals and Damco in combination with industry leading digital solutions.

“By operating as one entity, Transport & Logistics will be able to harvest synergies and optimise operations to secure the industry's most effective and reliable network.

“Strong capital discipline and better utilisation of assets will be ensured. When making investments, acquisitions will be the preferred option. The strategies for the individual businesses will be adjusted accordingly.”

It said that Damco and Maersk Line will “collaborate to deliver new innovative customer solutions supported by significant investments into digital technology”.

Board chairman Michael Pram Rasmussen said: “The industries in which we are operating are very different, and both face very different underlying fundamentals and competitive environments.

“Separating our transport and logistics businesses and our oil and oil related businesses into two independent divisions will enable both to focus on their respective markets.

“This will increase the strategic flexibility by enhancing synergies between businesses in Transport & Logistics, while ensuring the agility to pursue individual strategic solutions for the oil and oil related businesses.”