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Maersk sets sights on a big land-based acquisition

AP Moller-Maersk AS updates

Maersk has both the means and the desire to do a large land-based acquisition to balance the dominance of the world’s largest container shipping business, according to the Danish group’s chief executive.

Soren Skou told the Financial Times that four recent acquisitions — including two on Friday of ecommerce logistics groups in the US and Europe for more than $900m — gave Maersk the possibility to acquire new capabilities and then “supercharge” the growth of these companies.

“It is a cheaper way to grow than a mega-deal. But we have the financial resources and the appetite for bigger deals. We don’t have any mega deals in sight currently though, so to speak,” Skou added.

Maersk is known as a bellwether for global trade, carrying one in five containers across the seas bearing goods from Asia to Europe and the US.

Business is booming after years of sluggish growth following the 2008 global financial crisis as the economic recovery from the Covid-19 pandemic combines with manufacturers trying to rebuild stock levels.

“We believe that the situation right now is that there is unmet demand. Global capacity is not enough to carry all of the demand. Our customers are both trying to serve very strong basic demand, driven up by the stimuli packages, but also trying to build up inventories again,” Skou said.

The Danish group last week lifted its full-year profit guidance by about 50 per cent and said its results for the current third quarter were likely to be even better than bumper figures for the second three months of this year.

Skou said the boom for container shipping lines was likely to continue throughout 2021 but refused to be drawn on an outlook for next year. “None of us have been in this situation before, frankly,” said Skou, who has been at Maersk for the past 38 years, almost since the start of global container shipping.

Skou has radically transformed Maersk in his five years in charge, jettisoning its oil and other energy businesses and focusing on shipping and logistics. His aim is to provide customers, such as sporting goods group Puma and furniture retailer Ikea, with end-to-end services for transporting products from factories to shops via sea and land.

Maersk is increasing the amount of logistics services it sells to its main customers but many still only use it for container shipping, something Skou is trying to change. Revenues for logistics increased 38 per cent in the second quarter, almost all due to organic growth rather than acquisitions. Maersk’s last big acquisition was the 2017 purchase of Hamburg Süd for €3.7bn, consolidating its position in container shipping.

Other container shipping companies have begun ordering new vessels again, hoping for the current surge in demand to continue. But Maersk has eschewed big orders and is instead looking more at expanding in warehousing, distribution and air freight. It soon hopes to have $10bn in annual revenues in logistics, compared with $25bn last year for its Ocean business, mostly container shipping.

Skou said manufacturers were trying to make their supply chains more resilient by ending their reliance on single suppliers and building up more inventory but Maersk saw little evidence of so-called “near-shoring”, where companies move production back from Asia to Europe or the US.

He said he thought just-in-time supply chains were largely a thing of the past as they were “invented in the ’80s when interest rates were much higher than today” while now, with rates close to zero, “customers can afford to have more inventory”.

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