With an annual revenue of $20 billion to $30 billion, over 25,000 employees worldwide, and widely regarded as the most important component of the global conglomerate AP Moller-Maersk Group, Maersk Line is the largest and most influential container shipping line in the world. How and when did become a container shipping empire? What kind of fleet does Maersk Line operate with? How have they effectively achieved economies of scale and still stay sustainable? It is my intention to address all of these key questions in this article, with a primary focus on the history of the Denmark-based company.
Founded in 1928, Maersk Line was created by A.P. Moller. Once the company was established in 1928, A.P. Moller acquired the Danish company’s first five tankers that same year. He also oversaw the company’s expansion abroad, starting in the United States in 1919, and continuing with the establishment of offices in Japan, the United Kingdom, Thailand, Hong Kong and Indonesia. To enhance the company’s portfolio, Moller established a number of other businesses in the shipbuilding, agriculture and retail sectors and in 1962, he was awarded a concession to explore for and extract raw materials beneath Danish-controlled waters, which was an activity that eventually led to the formation of today’s Maersk Oil. Furthermore, A.P. Moller secured his family’s continued ownership of the company he built when he established the foundations that now control the majority of shares in the Maersk Group. When Moller passed away in 1965, his son Maersk Mc-Kinney Moller assumed chairmanship of the family’s foundations.
Since then, Maersk Line has quickly become the dominant force in the shipping industry, owning a significant percentage of the global market share. As of July 2011, Maersk Line’s container ship fleet comprises more than 600 vessels and a number of containers corresponding to more than 3.8 million TEU. In 2011, Maersk ordered 20 mega-sized container ships from Daewoo, each with a capacity of 18,000 containers. The first of these Triple E Class shipping vessels was delivered in June 2013 and was christened with the name Maersk Mc-Kinney Moller, after the founder of the Maersk Line.
The economies of scale offered by Maersk Line’s 18,000 TEU vessels are so significant that few can ignore them. If the Triple E’s consume 164 tonnes of fuel a day, the estimated IFO bunker cost of the Maersk Mc-Kinney Moller (18,270 TEU) would already be 35 percent lower than a typical 13,100 TEU vessel on a per TEU carried basis, which equates to $218 per TEU versus $333 per TEU. Apart from the fact that the ships are bigger, their hulls are reported to be designed around an average ship speed of only 23 knots, compared to over 24 knots for the first 13,000 TEU vessels, enabling them to glide through the water much more efficiently, thereby reducing operating costs and increasing profits for the largest company in the global shipping industry.