A.P. Moller-Maersk Group’s container terminal operating arm will make new investments to help shippers with landside connections.
In order to optimize the global supply chain, APM Terminals (APMT) needs to focus not only on the needs of the big container carriers that berth their ships at its docks, but also the needs of the thousands of beneficial cargo owners, truckers and other companies that move cargo in and out of its facilities on the landside, according to Henrik Lundgaard Pedersen, the chief commercial officer of the A.P. Moller-Maersk subsidiary.
He noted that Maersk Group has said that it wants to become a global integrator of container logistics. Terminals are the bottleneck through which ocean cargo must pass to connect with inland carriers that will move their containers by truck, rail or river.
“We are not overseeing the end-to-end. That is for the Maersk Group and our other customers,” he said. But when containers go from water to land or land to water, “that is a critical moment in their transport and that is where we are trying to integrate and optimize,” he said.
Pedersen also explained during the TPM conference in Long Beach this month the steps that APMT is taking to improve the customer experience at its terminals. He noted there was a consistency to the frustrations being expressed by shippers and transportation companies about cargo taking too long to move through ports, lack of consistency, documentation problems and poor cargo visibility.
While APMT is continuing to invest in the quay side of its terminals – installing or modifying cranes so the company can work larger containerships, as well as adding yard equipment – it is also increasingly looking at the needs of its customer’s customers.
Dries van Dongen, APMT’s global head of landside customers and inland services, said that while initially some shipping lines questioned why APMT should interact with their customers, that resistance has faded as they realize the need for collaboration between all members of the supply chain.
“The shipping lines realize that in order for there to be a good customer experience… it really makes sense that we engage with the BCOs,” he said.
Pedersen was emphatic that these conversations would not be used to swing business from other liner companies to Maersk Line. While Maersk accounts for 40-45 percent of APMT’s volume, the company is highly dependent on other carriers for its success.
“From an economic point of view, if all our other companies left us, we would go bankrupt,” he said. “APMT is way too big to just serve Maersk Line. If we were to break that integrity with our other customers, they would walk away.”
At the same time, Pedersen said the terminal industry is becoming more competitive. There is excess capacity because global container volume growth has slowed. Container shipping lines have merged and are “getting pressured on their earnings.”
As a result, he said the cost pressure they put on APMT “is enormous.”
Terminal companies can become more efficient by lowering costs, but he said APMT can also “produce new services that people want to pay for.”
Shippers want both reliability and flexibility from terminals, he said.
“They want predictability, but when it suits their supply chain, whether they are buying or selling, they want us to be flexible,” he said. For example, a manufacturer may have a need for a container to be expedited out of a terminal or, on the other hand, they may want a container held and stored.
He also said some shippers would like to deal with fewer companies and have fewer hand-offs of their goods as they are transported, presenting new opportunities for APMT.
While APMT is in the midst of completing the construction of a number of big terminals, Pedersen said the company is going to reduce its capital spending on new, “greenfield” projects, and instead focus on optimizing its existing facilities and how they interact with the hinterland. Those kind of projects will be less capital intensive than building new terminals from scratch.
The new terminals the company is in the process of completing include those in Moin, Costa Rica; Vado, Italy; and Tema, Ghana. It is also building a large transshipment hub to serve the Western Mediterranean activities of Maersk Line and the 2M Alliance partners – comprised of Maersk and MSC – in Tangier, Morocco.
As examples of the kind of services APMT may offer increasingly to beneficial cargo owners and others, he pointed to container weighing, container storage, faster gates, truck appointment systems and warehousing.
For example, in Buenaventura, Colombia Maersk has a container freight station at its terminal where it stuffs bags of sugar and coffee being exported into containers. Another warehouse is used for deconsolidation of products, such as air conditioners and televisions.
He noted that such warehouses do not have to be located at the port. He said APMT has 100 warehouses at inland locations in some 50 countries for customers.
For example, containers arriving at APMT’s container terminal in Lazaro Cardenas in Mexico can be taken not only to a nearby APMT warehouse just outside the port, but also moved by rail to a warehouse that APMT has near Mexico City.
Locating warehouses at off-dock locations may be necessary because of the high cost of waterfront real estate in some countries – including the U.S. – or because APMT has been awarded a concession for developing only a limited parcel of land at a port.
Cold storage warehouses are another area of focus, he said, and one that fits nicely with the strategy of Maersk Line since.
In some cases, he said APMT collaborates with Damco, the logistics and forwarding arm of the Maersk Group, though he said Damco offers a wider range of warehousing services, such as pick and pack of product.
While APMT offers these services at some facilities, he said that over the next three to five years, the company wants to expand this across its network, which encompasses 74 port terminals in 58 countries.
The new focus will also require an adjustment in mindset, he said. He said customer service needs to be taken to a different level, and that APMT is broadening its expertise by hiring more employees with logistics and supply chain expertise, and not just port experience. He also said the company is developing better IT products.
APMT is beginning to roll out a container weighing service at its U.S. terminals to make it easier for shippers to comply with the verified gross mass (VGM) regulations promulgated by the International Maritime Organization.
“Regulatory compliance we can’t do anything about, but we can do something about providing the product or the service at a competitive rate in what we think is the right place – in the terminal,” said Pedersen.
Van Dongen said that APMT already offers a VGM service in about 20 container terminals in other parts of the world.
“We lift the containers from the chassis anyway, so we might as well do it,” he said. “We’ve seen customers that have to go to a third party weigh scale, somewhere in the port even outside the port. That’s an extra step for them; it makes it more complicated, it makes for a handover.”
The company is improving its IT systems and plans to announce in April improvements to its computer platform that will give customers more visibility to their shipments.
Asked if there might be a wave of consolidation by container terminals similar to what has been seen among container shipping lines, Pedersen said while mergers can reduce the cost of management and other expenditures, there are limited opportunities for terminals to consolidate in individual ports unless the terminals of the two companies happen to be adjoined.
For example, van Dongen said Maersk has two terminals in Rotterdam, but they are in different locations in the port.
APMT has four terminals in the U.S. after having ended operations in Tacoma last September. Those terminals are in Miami; Long Beach; Elizabeth, N.J.; and Mobile, Ala.
In Elizabeth, N.J. APMT is spending $200 million on improvements designed to boost its handling of the larger containerships now able to call the Port of New York and New Jersey, following the raising of the Bayonne Bridge. These improvements include strengthening its wharves, four new gantry cranes able to reach across 23 containers so they are able to serve larger ships, and a new gate complex that it plans to open next year.
Maersk is also increasing the height of its cranes at Pier 400 in Los Angeles.
Pedersen said the last six months have been some of the most successful periods APMT has had in winning new business. In 2017, it won 29 deals and lost eight deals. In addition, volumes were up 6.5 percent last year.
He said the company might be interested in investing in terminals that are being privatized, but that fewer such opportunities seem to be available. He also said APMT would be willing to sell underutilized terminals, but that he thinks they would attract few investors.
However, he said APMT is interested in monetizing its investments in its strongly performing terminals – including those in the U.S. – by selling minority interest while retaining operating and commercial control.
APMT looks landward to boost efficiencies
