A BIG reason Maersk Group reformed itself into "four big business units" two years ago was to take care of its problem child, in-house forwarder Damco, which has been losing money for 18 months.
That task fell fallen to trouble shooter Morten Engelstoft, CEO of APM Shipping Services, into which Damco organisationally falls, reported the UK's Transport Intelligence.
In response, Mr Engelstoft stressed cost cutting, aiming to trim US$30 million to $40 million with a view to simplying management and reducing the unit's divisions from eight to four.
At Maersk's recent capital markets day, there was no explanation of "how Damco got into this mess" said Ti.
"Whilst the move to the Netherlands from Denmark has been criticised this can hardly be blamed for the comparatively low level of productivity highlighted by Engelstoft" said its report.
"Is the higher-cost base at Damco that he also described due to higher levels of customer-service related spending? The 4PL offering at Damco is strong, however this is not reflected in the profits," said Ti.
From 2010 to 2012, Damco did well, delivering profits on minimal levels of capital investment, then profits flattened before disappearing into into steady losses.
There is speculation that Damco's strategy of developing sophisticated information-based services combined with a down-turn in the forwarding market fueled its decline.
"It is also possible that the acquisitions that Damco made in air freight forwarding may not have worked-out," said Ti.
WORLD SHIPPING
10 October 2014 - 22:35
Maersk re-jigs for Damco recovery after forwarding unit falls into loss
A BIG reason Maersk Group reformed itself into "four big business units" two years ago was to take care of its problem child, in-house forwarder Damco, which has been losing money for 18 months.
WORLD SHIPPING
10 October 2014 - 22:35
Maersk re-jigs for Damco recovery after forwarding unit falls into loss
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