Friday, 13 March 2009

Giant logistics and oil firm rides out the downturn

While the big retailers’ stores are prominent landmarks and always in the news, further back along the supply chain the logistics firms distributing the goods are less visible. Maersk is the world’s biggest container ship firm, and in this picture of Bilbao Port on the North coast of Spain you can see some Maersk containers. In 2008 Maersk continued the growth of its 500 strong fleet, ordering 16 ships, each of which can carry a record 1,700 refrigerated containers.

Maersk is part of the Moller-Maersk group of shipping, logistics and oil companies and you might see the trucks on the road with the distinctive blue and white logo. Moller-Maersk reported growth in profits to $3.33 billion in 2008, as reported in Commodity Online. While 2008 revenues from container shipping were negatively affected by higher fuel costs and falling freight volumes, the higher oil prices stimulated oil and gas production. As oil prices rose to a historic spike in July 2008, Moller-Maersk reported a first half net profit rise of 40 per cent to $2.3 billion as reported in the Montreal Gazette, due to almost double earnings in its oil and gas division, and Offshore Magazine reported that the firm’s application for further development of the North Sea Hadfan oil field was approved.

Moller-Maersks’s ownership and control of several links in the supply chain is an example of vertical integration. This can help firms keep growing in times of economic turbulence as losses in one segment of the supply chain might be balanced out with increased revenues elsewhere. This is efficient for the firm but just one example of extending, fossil fuel dependent, supply chains. Moller-Maersk is more cautious for 2009 but still expecting profits and growth.

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