Cargo Shipping Company

K + N Pushes Maersk to One-Click Shipping in Ryanair Mold: Freight Markets

Freight forwarders led by Kuehne + Nagel International AG are prompting shipping firms including Maersk Line , the world’s biggest, to rethink their strategies after grabbing a chunk of the seaborne container market.

Kuehne + Nagel, the top sea-freight forwarder, and fellow- Swiss competitor Panalpina Welttransport Holding AG (PWTN) are joining Deutsche Post AG (DPW) ’s DHL Global Forwarding and Deutsche Bahn AG’s DB Schenker unit in shifting focus from trade routes to target key industries such as pharmaceuticals, where shipments need close control throughout the journey.

The strategy has helped the cargo brokers, which act as middlemen between freight companies and manufacturers, to take a 35 percent share of boxed sea freight. That’s still far short of their near-domination of air markets, where forwarders handle 95 percent of cargoes, leaving “huge scope for expansion,” said Damian Brewer, an analyst at RBC Capital Markets in London .

“The shipping lines’ market share will drop below 50 percent in the next four to seven years,” Kuehne + Nagel Chief Financial Officer Gerard van Kesteren said in an interview at the company’s headquarters near Zurich. “They can’t fight it because they can’t offer the end-to-end solutions that global clients need.”

Kuehne + Nagel stock is down 3.6 percent this year, compared with a 15 percent decline in A.P. Moeller-Maersk A/S, of which Maersk Line is a unit. Panalpina, also based in Switzerland , has lost 7.9 percent in the period.

While shipping companies will still reap revenue from carrying containers, the rise of the forwarders will diminish their bargaining power over rates, said Janne Vincent Kjaer, an analyst at Jyske Bank A/S in Silkeborg, Denmark . It also means the shipping lines will have to better target the forwarders, which could soon hold sway over more than half their income.

“Freight forwarders are a large part of our business and it’s absolutely important that we produce solutions that are attractive to both forwarders and cargo owners,” Michael Blach, Maersk Line’s vice president for key client management, said in a June 20 telephone interview.

Maersk Line is responding by overhauling a business model that has barely changed in 35 years and swamps clients with paperwork, the Copenhagen-based company said.

The revamp will see Maersk seek to boost direct bookings with “one-click shipping,” imitating the web-based model, which discount airlines such as Ryanair Holdings Plc used to cut costs and strip traffic away from more established carriers reliant on travel agents, Chief Executive Officer Eivind Kolding said in a video posted June 7.

Dispute Nearly Forced Huge Cargo Ship to Cancel Bay Visit ...

The Port of Oakland nearly missed out on a scheduled visit from an enormous cargo ship last week because of a dispute between local bar pilots and the world’s third largest container shipping company. The dispute is part of a larger battle over the rates shippers will pay pilots to safely navigate oversized cargo ships into and out of the Port of Oakland.

San Francisco Bar Pilots usually dispatch a single pilot to navigate a ship through the Bay. Citing safety concerns, the group wants two of its members to work together on ships longer than 1,115 feet. At night, they want two-pilot teams working on ships longer than 1,000 feet.

The bar pilots want to charge shipping companies a 50 percent surcharge whenever they dispatch a second worker onto a ship. They say they have spent $75,000 on special navigation equipment, and are in the process of training their nearly 60 members on how to work in two-person teams.

Because rates affecting two-pilot teams have not been adopted by the state legislature, the bar pilots have been negotiating the fees directly with owners of large vessels that want to use their services.

Those agreements were effectively scuttled, however, when the Pacific Merchants Shipping Association (PMSA), a trade group that represents large shipping companies, sent a memo to its members advising them that they are not legally required to pay the 50 percent surcharge.

Shipping company strategies, global management under turbulent conditions

Container Shipping Companies of the United States, American President Lines, Sea-Land Service, American Export-Isbrandtsen Lines

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