Maersk Offers Response to Go Slow Strategy

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Global Trade, Logistics

A couple of weeks ago, Stuart and I both posted pieces on Maersk’s recently announced “go-slow strategy. Admittedly, I took a rather and received this thoughtful reply from Soren Stig, Senior Director Head of Sustanability for Maersk Lines:

Dear Lisa,

Thank you for your comments and perspectives on our slow steaming initiative. Being a supply chain professional myself – and having worked with a significant number of our customers buyers – I recognize your arguments around WIP and working capital.

You are of course fundamentally right in that a prolonged transit has an adverse effect on cost of inventory. What the NYT article did not cover was the fact that end to end lead time impact is significantly lower than the additional steaming time on the ocean. The discussion we are having with stakeholders – and most importantly our customers – are not necessarily isolated to the ocean leg but a broader discussion about how we jointly remove ‘waste’ from international supply chains that are often 150-200 days long. In many cases we do ‘find’ or off-set the additional ocean transit elsewhere – either on our side (we can do a lot more to increase efficiencies in connection with port arrivals as an example) or on our customers side. I think you will be surprised to learn how few have done an ABC analysis – at SKU level – and consequently how few designed and optimized their inbound supply chains accordingly. There’s a lot of garden furniture moving from China to US in March¦

A significant number of our customers have also stressed that reliability is often of equal or greater value than speed. Maersk Line is today amongst the most reliable carriers in terms of on-time performance. The ability to plan around – and synchronize import supply chains – thereby more effectively manage exceptions related to e.g. the weather or operational breakdowns – are aspects that we are attributing as much weight to as our ability to run an efficient network of 500 ships with 40.000 annual port calls.

But as you state, at the end of the day we must add value and provide a service that there is demand for. We intend to do so – which of course require us to take a long term view and both listen to our customers and the communities we serve – and generate a return to our shareholders, thereby allowing us to invest for the future and continue to reduce the foot-prints we leave behind.

Thank you once again for your views and perspectives. They greatly help outline the trade-off’s and complexities involved in this discussion.

Kind regards,

Søren Stig

Senior Director

Head of Sustainability

Maersk Line

One of our readers commented on the piece I wrote by forwarding this link about new emissions rules proposed to the International Maritime Organization of the United Nations.

What do you think? Leave a comment.

–Lisa Reisman

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