Interview with Charles van der Steene, President for North America, A.P. Moller – Maersk

28 Nov Interview with Charles van der Steene, President for North America, A.P. Moller – Maersk

Maersk experienced a highly active 2023, marked by record revenues that jumped by a third year-on-year. Despite a dip in third-quarter incomes due to lower freight rates, volumes remained high. To start, what were the key factors behind Maersk’s success and the current global growth strategy?

Everything any of us owns has most likely traveled across oceans and lands as part of the big, intricate puzzle game that is logistics. It is not unusual for there to be 20 parties involved in one shipment – with 20 sets of paperwork – and if any of these people get delayed, everything stops. Truly integrated logistics reduces complexity by providing an all-in-one solution.

So, Maersk has been on a growth journey since 2018 to transform itself into a global integrator of end-to-end logistics. ​We have expanded our capabilities in air, land and sea, through organic growth and significant M&A investments, with much of that investment occurring in North America and the US.

We have been working to build a fellowship of trucks, planes, ships, trains, warehouses and logistics strategists to connect our customers’ worlds. We are very focused now on leveraging the substantial assets we now have at our disposal.

Post-COVID-19 crisis and the major transformation of international value chains, the world was hit with an energy crisis and conflicts in the Ukraine and the Middle East. How have global macroeconomic factors impacted Maersk and its logistics lines? What is the company doing to turn these new challenges into opportunities?

Supply chain disruption is a constant in today’s world, so resiliency is critical. For instance, during the pandemic, we injected around 40% more capacity into the local US market to support customers. We also focused on finding end-to-end solutions such as off-dock depots for storage, warehousing and transload facilities (into domestic trailers). Equally important, we invested in landside logistics capabilities to provide the end-to-end solutions to North American customers.

With the disruption in the Red Sea, our top priority is the safety of our crew, so we are rerouting and monitoring until the route becomes safe again. The main impact is longer transit times, disrupting supply chains. We are collaborating closely with clients to plan and navigate through this situation.

When it comes to resiliency, you need a logistics partner that is investing in tech solutions. The logistics industry will need to become more tech-driven, which will enable better planning and empower customers to be more proactive than reactive. An example is digitizing the supply chain. A single container being transported can require up to 100 document exchanges per trip, significantly adding to shipping costs with many manual errors potentially delaying the cargo.

Nearshoring has been continuously cited as a standout option for increased resiliency in an increasingly unstable world. While farshoring and farsourcing are more vulnerable to delays and disruptions, having raw materials or business functions nearby allows companies to have greater control over their goods and services.

So, for us, we are very focused on building logistics bridges to connect these customers’ global operations with regional solutions.

Maersk is progressing well toward its green agenda goals, including the launch of the world’s first methanol-enabled vessel and making large deals under its ECO Delivery initiative. Additionally, quite recently Maersk’s owners have started up a green methanol production company, C2X. Why is Maersk considered a leader in decarbonization of the global logistics sector? What major milestones has it passed and what else needs to be done to create a net-zero transport and trade ecosystem?

This is the decade of action for sustainability. Maersk is committed to being a first-mover in our industry when it comes to climate action. We aim for 25% of all ocean cargo being transported using green fuels by 2030, and we have an ambition to be net zero across our business by 2040.

Maersk recently deployed the world’s first green methanol-enabled container vessel, and we have 24 more planned to come online beginning in 2024.

The challenge our industry faces is the necessary ramp up of green fuel production.

We joined leading global shipping lines at COP 28 calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO), the global regulator, to create the regulatory conditions to accelerate the transition to green fuels. And we partnered with A.P. Moller holdings in backing C2X to help produce green methanol at scale.

We also need ambitious, global regulation to close the price gap between today’s fossil fuels and green fuels. We need the IMO to deliver a global GHG price. Additionally, Maersk has long advocated the implementation of a carbon tax to level the playing field and provide the right economic incentives for companies to really lean into the green transition.

Another transformative trend in trade and transport is the introduction of cutting-edge digital technologies. In October, Maersk signed a deal with Starlink for high-speed connectivity of its more than 300 operated container vessels. In the same month, the company started up its first commercial autonomous trucking lane between Houston and Oklahoma City. What new digital technologies is Maersk introducing to the world in the world of logistics? How have new technologies such as big data, robotics and AI impacted the company’s competitiveness?

Technology is a fundamental aspect of our strategy. Customers demand more visibility, punctuality, and real-time information. Maersk.com stands as one of the largest V2P (vendor-to-partner) sites globally. Another exciting development is our new supply chain platform, aiding customers in global product sourcing and proactively utilizing artificial intelligence and machine learning.

E-commerce’s emphasis on speed has driven the adoption of robotics in warehousing. We are actively engaged with numerous startups, handling some aspects in-house and collaborating with partners to stay ahead of the curve. In the highly competitive logistics industry, technology is undeniably the future.

The USA has long been a pivotal market for Maersk, with direct operations in the country spanning over a century. In October, Maersk inaugurated its third large air cargo gateway at LAX, following the openings in Atlanta and Chicago. How does Maersk perceive the current trends shaping the US market concerning transport and trade, and what strategies is the company implementing to capitalize on emerging local opportunities for growth?

Maersk has a rich history in the US. We have 100+ years of experience here and employ over 10,00 people. In 1913, the first Maersk vessel to call a port in the US was in Galveston, Texas. The first Maersk company in the US was established in 1919. We have long been a leader in ocean logistics and currently move approximately 13% ocean container volume in the US. Also, APMT is one of the largest US terminal operators with operations dating back to the 1970s.

The US stands as the world’s largest logistics market. Maersk has had a robust presence on the ocean side; our land-side logistics segment is experiencing significant growth, presenting numerous opportunities. Much of our investment is directed towards this expansion, opening new distribution centers and enhancing our last-mile and middle-mile capabilities.

You have had an extensive career in management roles with Maersk spanning nearly 13 years worldwide, including Europe, the Middle East, and a previous role in the US. Now, as you return to the US as President of North America, a crucial role for the company, what are your top priorities as the leader of Maersk’s North American operations? Additionally, what is your long-term view for both the company and the global logistics sector beyond 2024?

Maersk’s North America team is one of the greatest teams in supply chain and logistics, and in this role, I look forward to growing, learning and most importantly, helping our employees and customers thrive. My priority is to accelerate our ability to deliver truly integrated and sustainable logistics solutions for our customers, regardless of the volatility impacting the global supply chain on a daily basis.

We have come a long way as a company to become a true end-to-end provider for our customers, and I have a feeling the best is still to come.