Logistics Performance Management of Maersk Line

**Dr. Chhavi Jain

Assistant professor
Department of Management Studies
The IIS University, Jaipur
*Ms Shilpi Chakravarty
Research Scholer & Assistant Professor
Discipline of Foreign Trade Management
The IIS University, Jaipur

Abstract
Shipping industry is the driving force that shapes the integration of global
logistics. The face of logistics industry is changing day by day i.e. from profit
orientation to customer satisfaction. The giant of this industry Maersk Group
trying to create a business model which emphasis on developing core
competency by customer contentment, communication, using innovative
technology. They also used new marketing tools which are out of the league in
this industry to develop an integrated communication channel.
Here we investigated theoretically and empirically the key factors of this
company which make them a global leader and also suggested them new areas
of focus related to increase in market share and creating brand loyalty towards
the company.

Key words: Logistics performance, Customer Satisfaction, Nomination, Key

Performance Indicator

Introduction:
Before
we
look
into
logistics
and
supply
chain performance,
we
need
to
discuss
Supply
Chain Management
(SCM).
Logistics
and supply
chain performance is both involved in
SCM. SCM is the coordination of logistics, location, production, and inventory, to
name a few, in the supply chain. The systematic and strategic coordination of
these functions achieves the best combination of efficiency and response to fulfil
customers demands. Moreover, the coordination of these business functions
improves the company and its supply chain as a whole. A supply chain is a
network of facilities and distribution options that performs the functions of
procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to
customers[1].
The Council of Supply Chain Management Professionals (CSCMP) states that
logistics is a part of the supply chain that plans, controls and implements the
movement of the inventory, i.e., the goods and services, from the point of

production to the end consumer. In the corporate world, logistics scope includes
transportation, shipping, warehousing and import and export operations. In
addition to these functions, logistics also handles inventory management,
production planning and customer services [2]. The importance of performance
in the supply chain is immense. An effective supply chain performance system
can provide the basis to understand a companys supply chain system. It
influences the supply chains behaviour and, more importantly, it shows
information regarding the outcomes of the supply chain to the company and its
stakeholders. Basically, supply chain performance plays a major role in the
strategy of a company. It has been proved that wellexecuted supply chain
performance system measures lead to improvements in the overall performance
of a company .
Before 1990, logistics and supply chain performance was measured on a cost
reduction basis. The lack of an appropriate performance measurement system
has been a major obstacle to forming an effective supply chain. Companies in a
supply chain have to decide to be either costefficient or timedriven. One
contemporary way to measure the supply chain performance is in the form of
metrics or Key Performance Indicators (KPI). The development of these KPIs
should take place through the SMART goals (Specific, Measurable, Action
Oriented, Relevant & Timely), forming a set of effectiveness, efficiency, customer
satisfaction and IT utilization & Innovation. However, these indicators are more
difficult to measure and compare. Considering a full set of indicators could result
in a huge amount of data, which would require a lot of effort and high costs both
in acquiring and analysing. A solution to this would be to select the set of the
most important indicators, keeping in mind the goals of the company. The
analysis should be performed with caution so that the resulting set of indicators
covers every relevant point of view.

Material and Method:

In this study we collected data from both primary and secondary mode. We
conducted a survey on companys clients as well as gone through the secondary
material available on internet and published journals.

Selected Company:
Maersk Line is the worlds largest shipping company. It operates over 600 ships
and 2.2 million containers and takes 23,000 bookings every day. With a 14.5%
world market share, a Maersk vessel arrives in a port every 15 minutes. The
bread you ate this morning, probably its flour arrived on a Maersk ship.
Asias rise as an economic power has made it the most dynamic region in the
world. Maersk Group is active across the continent, operating 10 business units.
From China to Kazakhstan, Qatar, India and Vietnam, Maersk supports wealth
through long-term investments and the transfer of critical knowledge to local
workforces.

The Challenge:

Like many other companies, Maersk relies on its IT to deliver strategic initiatives
in product, customer service and operational efficiency. Major projects at the
time included a new global customer service booking system, upgrades to its
enterprise services architecture and new customer facing systems reflecting
Maersks desire to lead through innovation. This meant IT was under exceptional
pressure, with demand seemingly endlessly outstripping supply.
In 2009-10 it took an average of 150 days for Maersk Line to get value out of its
development pipeline. A quarter of all requirements took over a year to develop,
while any meaningful change would take at least two years to deliver.
In other words, the company was moving too slowly which also meant it was
proving very costly to deliver IT. Nor were they really sure that they were
delivering the right thing. The department felt pulled in competing directions by
numerous stakeholders.
Sometimes the priorities produced an actual conflict between quality and cost,
for example, prototypes moved into production and being used by tens of
thousands of users.
IT had somehow become an order taker for the rest of the company. No matter
how hard they tried to fulfil delivery on time and on budget, the rest of the
business seemed to perceive them as slow, expensive and lacking in innovation.
Everyone was frustrated.
There were significant problems that seemed to block any change:

Technical a high level of dependency on legacy systems

Structural significant off-shore and outsourced IT often caused priority
conflicts
Organizational budget and approvals processes could add months of
time
Cultural the teams had tried different ways of working before, including
Agile and Scrum, but the changes had never stuck and it was making no
meaningful difference to how long it took to deliver the change needed by
customers.

What make Maersk a Idealistic Brand?

From last 5 year Maersk is in top 10 brand in shipping industry:
S.No
1
2
3
4
5
6
7
8
9

Company
APM-Maersk
Mediterranean Shg Co
CMA CGM Group
Evergreen Line
COSCO Container L.
Hapag-Lloyd
APL
Hanjin Shipping
CSCL

Share
15.4%
13.6%
8.3%
4.3%
4.2%
3.8%
3.5%
3.4%
3.0%

Above table shows that Maersk is a global leader in the industry and captured
15.4% of the total worlds market. What make it a top brand is its promotion
strategies along with its sustainable growth.

Social Media:
For Maesrsk social media is about communication, not marketing. Its about
engaging, not pushing. And social media is definitely not just about the media
side. Here we are engaging our clients with the work environment of the
company and it happenings. The Facebook page is run by the Maersk Line
communication team for B2C use, and they attract attention and create
engagement by sharing both positive and negative news (such as when they
struck a whale last year a description was posted on Facebook and soon
became the most shared post on the page, with a 1:1 like to share ratio, and
received mostly positive comments) a way of showing their credibility. They
also share users and employees images from Instagram and stories to create
a visual and respectable brand. The team use a glocal approach with over
150 country communication managers worldwide being set up to post on the
global page but with local news only being visible to their region. This ensures a
simple approach which produces relevant customer communication.
The Maersk Line LinkedIn Company Page (/company/maersk-line) has almost
40,000 followers. Maersk Line found, after a social media survey they conducted,
that their customers would prefer to connect with them on LinkedIn than any
other network and they therefore use the platform in a very B2C manner to
provide shipping industry news which is relevant to their followers (from the
Company Page) and have high-end discussions in groups they decided to
engage with customers on LinkedIn by setting up groups: The Shipping Circle
group in January 2012 and The Reefer Circle group in August 2012 (both started
by Jonathan). With a few hundred select users in each (users require approval to
join), the groups consists of shipping experts from around the world who debate
industry challenges and opportunities a great opportunity to gain knowledge
from experts who Maersk may not otherwise meet. There are plans for further
groups, especially a customer specific group or for a category of customer. Apart
from this Maersk is also visible on other social tools like Twitter, Google plus, You
Tube Etc.

Sustainable approach of Maersk:

In 2014, company introduced a new sustainability strategy aimed at addressing
significant sustainability challenges in a way that creates value for society and
Maersk. We have identified three key priority areas where focusing our efforts
will help us unlock growth. At the same time, The will continue to integrate
sustainability in our operations, mitigating risks and raising performance levels.

Energy efficiency and climatic change - Maersk Lines reduction target is

60% less CO2 emitted per container moved by 2020 (2007 baseline).

Combined with an expected 80% more volume in 2020, reaching this

improvement target will result in Maersk Line having saved approximately
200 million tonnes CO2 from 2007 to 2020. This means they can sustain
their efforts at decoupling growth from resource consumption. By the end
of 2014 Maersk Line had reduced emissions by 39% per container.
Maersk Group-wide target is a 30% relative CO2 reduction by 2020 (2010
baseline). By the end of 2014 we had achieved a 19% reduction.
Governance-The Group's Climate Change strategy includes the Group target for
reducing CO2 emissions (see above), and is overseen by the Maersk Group
Sustainability Council. The businesses are required to develop strategies and
targets to reduce their environmental impact in line with their respective
materiality and risk assessments. Performance is monitored and progress
reported every half a year to the Group Sustainability Council.

Enabling Trade-To succeed with their goal to reduce some of the many
external barriers to trade, they will collaborate with other stakeholders
from government bodies and infrastructure planners to the local farmer.
Including as well as increasing their knowledge of transport and logistics
could be what will enable improved trade conditions.
Investing in training and education - This will involve setting up or
expanding Maersk Training Centres, expanding collaborations with
universities and secondary schools, developing curricula and designing
new learning programmes. They will ensure that Maersk employees are
involved in the programmes as instructors and consultants.

Swot Analysis of Maersk:

Strength

Weakness
Opportunity

1. The largest container ship operator and supply vessel

operator
in
the
world
2. Operates in 130 countries and have a workforce of
over
100,000
employees
3. Apart from shipping, company engages in energy,
transportation, offshore, retail, and manufacturing
businesses
4. Strong global brand name and reputation as a top
industry player
1. Relatively low visibility in road and air transportation
2. Fluctuating profit margins is a concern
1. Expand customer base geographically or through new
services
2.Strategic
alliances
and
joint
ventures
3. Available technological innovations

Threat

1.
Economic
2. Changes in regulations of various
3. Rising cost of business
1.
Mediterranean
Shipping
2.
CMA
3. China Ocean Shipping Company

.Competitors

slowdown
countries
Company
CGM

Analysis & Recommendation of current Logistic performance of

Maersk:
We conducted a questionnaire survey on connected clients of the company in
Rajasthan and ask them the reason of connectivity with Maersk. And the analysis
is given below

Association of clients with the company In Rajasthan the corporate

office is situated in Jaipur from last 8 years and we found that 32% of
clients are associated with them from 1 year to 3 years and 1 year
followed by 22% are in the category of 3 to 5 years and only 7% are
associated from more than 5 years, which shows that Maersk recently
created its image among clients in Rajasthan.

Association with Maersk

First Time

7% 7%

Less than 1
21%

1-3
32%

3-5
More than 5

32%

By the means of this analysis we analyse that most of the clients of Maersk are
new so there is a great need of promotional strategy and capturing of market.

Source of Information As we already mentioned that Maersk

global Brand name and it is visible on many different virtual modes
but if discuss about Rajasthan the most informative source id
companys Website itself as 46% clients are getting information by its

is a
also
the
web

tool, followed by C&F agents who are third party logistics who provide
lisoning between the shipping line and the traders and only 18% are
getting connected with social media. Therefore Maesrk should work more
on their social media tool by increasing offers or referrals techniques to
grab
more
and
more
clients
on
their
Fanpages.

Information received from which source

9%

website
social media

27%

c&F

45%

clients

18%

Preferred channel for using Maersk services - There are many

channels by which shipping can be made, its up to trader which channel
they select. For Maersk 39% are using C&F channel that means freight
forwarders are promoting the company in good manner followed by
nomination in which importer decide the channel of shipping and DAMCO (
personal freight forwarders of Maersk) 26% that and only 4% clients are
directly
using
Maersk
services.

Preferred channel for using Maersk Services

4%

Directly

25%

Through C&F
39%

31%

DAMCO
Nomination

By these figures we analyse that still people are relining on C&F agents in
selection of shipping line so company should work on attracting more and more
agents towards them. DAMCO although its own brand but then to lacking behind
in grabbing customer. Maesrk should also work on the strategies to create
customers directly use the services by making services more and more user
friendly to gain maximum profit margin.

Customer satisfaction In this study we have taken the key indicators

of logistic performance as our base line and try to apply on the company
strategies and impact of in on customers.

Customer Satisfaction
25
20
15
10
5
0

By the means of analysis we identified that most of the key indicators and
factors are highly influencing for customer satisfaction out which better service
quality in terms of competitive price is most preferred factor which shows that
market of Rajasthan is still price sensitive so company should work on better
competitive prices. Next is connectivity with the globe and better use of
technology which show that Maersk marked its presence throughout the worlds
leading ports and there is a good use of technology and innovation. Another USP
of Maersk is the easy connectivity of shipper and line by the means of userfriendly web portals and 24/7 customer care services.
If we analyse the key performance indicators of Logistic performance Customer
satisfaction leads as the company provide best valued services in terms of time
and price followed by Effectiveness of this brand leads due the better services
and global reach. Next is Efficiency of the employees and its fast services which
provide better results and lastly Technology & innovation which keep the
employees and customers updated.

Conclusion-

Maersk is a global leader and trying to capture more and more market in Asia
and for that company is focusing on customer satisfaction and better technology
but they have to note that Asia and especially country like India, a developing
nation is a price sensitive market so the strategies should be formed by keeping
in mind about the user friendliness and competitive prices. Apart from it the key
performance indicators are also been customised according to markets demand
to achieve higher market capturing.

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Business
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Web-liography:
1. http://shippingwatch.com/carriers/Container/article6743426.ece
2. http://www.seatrade-global.com/news/americas/container-shippingdemand-to-grow-rates-to-be-on-slight-decline-maersk.html
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