Cash-rich Maersk looks to Gemini for future profits

And on the other side of the world, also in February Maersk completed its latest warehouse in Rotterdam, a 35,000-m2 cold store for fresh fruit, proteins and pharmaceuticals among other temperature-sensitive cargoes. One of a global network of leased and wholly owned cold stores for customers with perishables, the warehouse could hardly be closer to the ship. It is located right by a Maersk-owned APM terminal, Maasvlakte II, and next door is Maersk’s Star Depot for empty reefer equipment.

Although the mayhem in the Red Sea forced Maersk to hike freight rates like other shippers, profitability along the container routes actually improved, despite having to sail south of the Cape of Good Hope.

As Morningstar notes: “The company’s strong balance sheet, with cash and deposits totalling US$22.3Bn, and a substantial increase in EBITDA and EBIT demonstrate its operational progress amidst market volatility. The logistics and services and terminal segments have shown impressive growth, with the former achieving an 11% increase in revenues and the latter reaching record revenues due to higher volumes and tariffs.”

“Logistics and services and terminal segments have shown impressive growth”

Maersk’s annual report shows that profitability in the ocean-going business improved mainly because of simply raising freight rates, but also because of attention to a high utilisation and cost controls. “Operational costs were stable year-on-year, offsetting the increasing costs and additional bunker consumption of re-routing the network,” it explains.

Big-scale logistics

But can Maersk keep this up? With big-scale logistics as the new growth strategy, in February the Copenhagen-based group and Hapag-Lloyd launched their new Gemini alliance following a reshuffle of the great container shipping partnerships. A formidable force, Gemini boasts a 340-vessel fleet and 3.7M TEU capacity that will, Maersk promises, provide an industry-leading schedule once the alliance is up and running fully by June. It will take that long because Maersk and Hapag-Lloyd still have existing commitments under expiring alliances.

The phasing-in of Gemini, which is founded on 29 ocean mainliner services backed by 28 shuttle services, is expected to be completed with minimal disruption,” reports investing.com.

Decarbonised logistics

Since taking over the top job in 2023, Mr Clerc has focused on what he calls “resilient supply chains” during a period of considerable upheaval that are based on the historic business. He has worked his way through the ranks, most recently head of ocean and logistics and before then, chief commercial officer. His career has been marked by a talent for innovation, one of the most recent of which is a long-term bet on electric trucks for the last mile of delivery off the wharves and between factories and warehouses.

In January, Maersk started transporting the water pumps of a Danish client, Grundfos, in e-trucks. Although battery-powered delivery costs roughly three times as much as conventional diesel vehicles, this is what a growing number of clients want.

"This is a gigantic task, but we must not be intimidated by it," says Birna Odefors, managing director of Maersk Area Nordics, where a large number of customers are pioneering what are known as decarbonised logistics. The pilot programme started in late 2024 but is already heading for the transport of 600-800 containers a year.

These emissions-free deliveries are linked to another Maersk innovation called ECO Delivery Ocean that a growing number of clients are also buying into. The ships are fuelled by a mix of alternative marine fuels, such as waste-based biodiesel and bio-methanol that combined, cut emissions by about 80%. 

Looking forward, a slimmed-down Maersk sees a highly profitable future on most of its routes but most importantly, in fast-growing southeast Asia. The shipping business now contributes about 75% of EBITDA and Mr Clerc is relying on Gemini to deliver the profits of tomorrow.

“The Asia-Pacific economy is set to remain a crucial driver of global growth in 2025, with strong performances expected in several emerging markets alongside stabilising conditions in major economies like China,” the group predicts, citing in particular India, Vietnam, Thailand and Malaysia.

As for the Red Sea, in February Maersk welcomed peace talks in the region but warned that “the situation remains complex and unpredictable” and that “the security risk for commercial vessels in the Red Sea and Bab-el-Mandeb Strait remains high.”

While hopeful that things will settle down by mid-2025, Maersk will continue to take the long way round until it is confident its ships, seafarers and cargoes are safe.