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A new direction: How Maersk Line simplified its business to return to growth

At PA’s executive seminar in Copenhagen, Søren Skou – CEO of Maersk Line – explained why the company’s future looks bright despite recent hard times.

Søren began by describing the shipping container as one of the 10 most important innovations in history: “The standardised container has enabled the Western world to move its production to Asia and build ships that ensure the global transportation of all kinds of goods at a very low cost.”

He went on to explain that container shipping represents over half of Maersk group’s revenue. In 2009, however, demand dropped for the first time in 30 years. In the first quarter of 2012, Maersk lost $7 million per day.

Since then, the company’s fortunes have improved dramatically. Søren said, “In 2013, we made money every day, and our profit was $1.5 billion.”

Explaining that Maersk Line has yet to achieve its objectives, but that its future looks bright, Søren outlined the key steps in the company’s transformation process.

Simplicity and communication

Søren described how, in recent years, Maersk’s headquarters have been slimmed down, reducing staff numbers to 650. Ten uneconomic shipping routes have been closed and the company’s senior management team has been reduced to six members. Performance management has also been introduced, and the corporate culture has been redefined.

Søren said: “Traditionally, Maersk recruited its staff internally but the old model, where the organisation was based on shipping generalists, is no longer sustainable. Today, the organisation needs to be supported by specialists. When I took office, we had 160 projects at our headquarters but this has been reduced to 25 strategic projects. In the past, our corporate culture was also characterised by some degree of arrogance because our unit was the biggest in the Maersk group, and we thought that we deserved the biggest investments.”

Today, however, Maersk Line’s culture is all about strengthening teamwork with a focus on simplicity: “We employ 33,000 people worldwide, of which 8,000 work in our ships. Our job is to make all employees do the best they can every day, and this requires a lot of effort in terms of communication. Managers need to meet their employees face to face. This is an essential part of our culture.”

Also speaking at the seminar, PA IT strategy expert Søren Lehn added: “Container shipping is a sector with an impressive growth rate of 5.7% but it requires massive investments. With prices that vary with plus/minus 50%, the unknowns are significant.”


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