A.P. Moller-Maersk has announced that its Chief Executive Soren Skou, is retiring at the end of the year to be replaced by Vincent Clerc, the present head of the ‘Ocean and Logistics’ business.
The announcement is not a huge surprise. Soren Skou has been CEO since 2016 and has presided over significant change at Maersk. Vincent Clerc has been head of the Ocean and Logistics business since 2019 and as such has been a central figure in both the day to day management of Maersk, but also its re-orientation into being a broader logistics provider.
Soren Skou became CEO after the Board of Maersk became dissatisfied with his predecessor, Nils Smedegaard Andersen, despite the latter restructuring the company after a period of significant difficulty. Soren Skou initially focused the company on improving the performance of the core ‘Ocean’ shipping business but extended this to develop an integrated logistics business in sea, land and air freight.
So far, this strategy has been very successful, with record profits and profitability. However, the past two years is no guide to the underlying strength of the business as the market conditions in both sea container and air freight have a been a-typical. Freight rates in container shipping are now falling fast and sustaining existing profits, let alone profit growth, may be hard work.
The challenge for Vincent Clerc is to apply the new Maersk business model to the new market conditions such as profitably utilising its new fleet of freighter aircraft in a slower, more cost-conscious market. There were signs that even before 2020, Maersk had been focusing more on profitability in shipping and expanding in other areas of logistics rather than the traditional instinct of large shipping lines to defend market share. The next year or so will be a test of this, with substantial numbers of new vessels entering service combined with modest demand growth. Speaking to the Wall Street Journal, Mr Clerc articulated this challenge with the comment, “We clearly have to find a new balance in this new market”.
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