Maersk Unveils SAR 1.3 Billion Logistics Hub at Jeddah Islamic Port: A Major Milestone in Saudi Arabia’s Global Supply Chain Ambitions

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Maersk Unveils SAR 1.3 Billion Logistics Hub at Jeddah Islamic Port: A Major Milestone in Saudi Arabia’s Global Supply Chain Ambitions

August 27th, 2024 Tim Jay Leave a comment

Under the auspices of HRH Prince Khalid Al-Faisal bin Abdulaziz, adviser to the Custodian of the Two Holy Mosques and Governor of the Makkah Region, and with the attendance of HE Eng. Saleh bin Nasser Al-Jasser, Minister of Transport and Logistic Services and Chairman of the Saudi Ports Authority, Prince Saud bin Mishal bin Abdulaziz, Deputy Governor of the Makkah Region, inaugurated Maersk’s largest global logistics investment at Jeddah Islamic Port. Valued at SAR 1.3 billion, the event drew key figures from Saudi Arabia’s logistics and maritime sectors.

The newly launched logistics park is one of ten such facilities at Jeddah Islamic Port, funded by private sector investments. This initiative aligns with the Saudi Ports Authority and the Ministry of Transport and Logistic Services’ strategy to develop advanced logistics infrastructure in Saudi ports through partnerships with leading national and international companies. The park is set to enhance the efficiency of logistics services and boost operational capabilities, solidifying the Kingdom’s status as a pivotal player in global maritime trade.

HE Al-Jasser highlighted the robust support from the Custodian of the Two Holy Mosques and the Crown Prince for the transport and logistics sector. He noted that Saudi Arabia’s port sector is experiencing unprecedented advancements, marked by increased operational performance, record achievements in international metrics, and expanded maritime connections with countries worldwide. The sector has become an attractive destination for significant global investments, with foreign capital in the logistics domain exceeding SAR 10 billion. This influx of investment is driving economic growth, fostering knowledge transfer, and creating over 10,000 direct and indirect jobs, further positioning the Kingdom as a global logistics hub.

The Minister further explained that the new logistics park at Jeddah Islamic Port will play a crucial role in bolstering the Kingdom’s economic activity, providing high-efficiency logistics services to support trade and exports, and enhancing supply chain capabilities. He emphasized that with ongoing support from the Crown Prince, the transport and logistics system will continue to meet the ambitious goals of the National Transport and Logistics Strategy in alignment with Saudi Vision 2030.

HE Mr. Omar Hariri, President of the Saudi Ports Authority, underscored that the new logistics park represents a continuation of strategic partnerships between “Mawani” and major global and national companies. He highlighted the park’s contribution to the growth of the logistics services industry and its role in advancing economic and developmental activities by offering advanced, intelligent logistics solutions that facilitate exports and strengthen supply chains. These advancements are expected to lead to significant improvements in operational performance at Saudi ports, further enhancing the country’s logistics sector and global trade connectivity.

Spanning 225,000 square meters, the integrated logistics park includes facilities for the storage and distribution of general cargo, refrigerated food products, and re-export goods, as well as areas for Less than Container Load (LCL) cargo. It also features an e-commerce fulfillment center with high-density storage and innovative mechanical solutions, along with a specialized internal women’s academy. This academy aims to empower Saudi women by providing specialized training and employment opportunities, contributing to gender diversity in the workplace.

The park is equipped with an advanced warehouse management system, utilizing modern technologies and digital solutions for efficient inventory management, as well as state-of-the-art security measures to ensure the safety of the facility, its employees, and customer goods.

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Maersk Commits $2 Billion to Boost Pakistan’s Port and Transport Infrastructure

August 19th, 2024 Tim Jay Leave a comment

Danish shipping giant Maersk has announced a significant $2 billion investment in Pakistan’s port and transport infrastructure over the next two years. This investment aims to contribute to the country’s infrastructure development and drive economic growth, according to a state-owned news agency.

As part of this initiative, Pakistan’s Minister for Maritime Affairs, Qaiser Ahmed Sheikh, is scheduled to visit Denmark this month to sign a Memorandum of Understanding (MoU) between Maersk Shipping Company and Karachi Port Trust.

Qaiser Ahmed Sheikh emphasized that Karachi holds immense potential to increase exports, and the Ministry of Maritime Affairs is committed to creating a conducive environment for the business community to capitalize on this opportunity.

This announcement follows the recent commitment by Abu Dhabi Ports Pakistan CEO, Khurram Aziz Khan, who unveiled a $250 million investment in Karachi Port over the next decade during a meeting with Prime Minister Shehbaz Sharif. Khan also outlined plans for a $130 million investment in a state-of-the-art multipurpose terminal, expected to be completed within two years. Enhancements to the container terminal facility at Karachi Port will include automated gates, an expanded berth, a crane rail track, and additional infrastructure upgrades.

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Maersk Alerts Shippers to Potential Supply Chain Challenges Amid U.S. Labor Negotiations

August 16th, 2024 Tim Jay Leave a comment

Maersk has issued an update concerning the North American market, focusing on the ongoing labor negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA). With the current contract between the two entities set to expire on September 30, industry stakeholders and shippers are growing increasingly concerned about possible disruptions at U.S. Gulf and East Coast ports.

The ILA has already submitted the required notifications to government agencies and negotiating parties, signaling the possibility of a strike if a new agreement is not reached. However, due to a ‘no strike’ clause in place until the contract expires, no job actions are anticipated before October 1. It’s important to note that these notifications do not guarantee that a strike will occur.

Maersk remains optimistic that both parties are committed to reaching a deal that will keep supply chains robust and efficient. Despite a history of successful negotiations, the potential for a strike looms as long as a new contract remains unsettled.

“Disruptions could be localized or widespread. In the event of a general work stoppage on the U.S. Gulf and East Coasts, even a one-week shutdown could take 4-6 weeks to recover from, with significant backlogs and delays worsening with each passing day,” the Maersk update cautioned.

In case of disruptions, Maersk is prepared to help customers find alternative routes, transportation methods, or distribution schedules to ensure the continuity of their supply chains. Customers are encouraged to maintain close communication with their Maersk representatives to discuss supply chain needs and develop customized contingency plans if necessary.

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Maersk Surges Ahead in Q2 2024 Amid Strong Market Demand and Supply Chain Challenges

August 8th, 2024 Tim Jay Leave a comment

Maersk (Maersk) has sustained its positive momentum through the second quarter of 2024, achieving notable growth across all sectors and significantly enhancing its financial performance.

The company reported an EBIT margin of 7.5%, a substantial improvement from the 1.4% seen in the first quarter. Ocean profitability saw a marked increase, while Logistics and Services continued their steady expansion. The Terminals segment also performed robustly.

On August 1st, Maersk revised its 2024 forecast, citing the expansion of the Red Sea crisis and ongoing strong market demand as key factors. The Ocean segment experienced considerable volume growth and higher freight rates, particularly for goods originating from Asia, as supply chain pressures intensified.

However, the Red Sea crisis and the need to reroute vessels south of the Cape of Good Hope led to increased operational costs. Despite these challenges, profitability returned to positive territory. While earnings were lower than in the same quarter last year, the performance was significantly better compared to Q1 2024 and Q4 2023.

The Logistics & Services division recorded a 7% year-on-year increase, driven by higher volumes across all product categories, which more than compensated for lower rates. Profitability in this segment improved both sequentially and year-on-year, thanks to greater asset utilization, effective cost management, and advancements in addressing client implementation issues within North America’s ground freight sector.

Maersk’s Terminals division continued to see increased throughput, particularly in North America. Revenue per move surged, driven by higher tariffs and storage fees, though the cost per move only rose slightly. Strong sales growth and rigorous cost control measures contributed to one of the highest EBITDA levels the company has ever achieved.

Vincent Clerc, CEO of Maersk, commented, “Our results this quarter confirm that all our businesses are moving in the right direction. Market demand has remained strong, and the situation in the Red Sea continues to exert pressure on global supply chains. We anticipate these conditions will persist throughout the remainder of the year. In response, we have invested in additional equipment across all our businesses to better support our customers amid these ongoing disruptions.”

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A Carbon Neutral Path for Maersk Still Requires LNG

August 8th, 2024 Peter Frerichs Leave a comment

A.P. Moller-Maersk is still on course to hit its carbon emissions targets, but market forces are demanding they take an alternate route.

Methanol has been pitched to replace heavy fuel oil, bunker fuel, which has long-powered maritime vessels and contributes to ocean shipping’s balance of 3% of all global greenhouse-gas emissions annually. Maersk, like many other shipping giants, signed on and ordered 25 ships that could run on bunker fuel and methanol. However, a nagging worry for the industry had always been the methanol supply and, ultimately, the price tag to make this industry-changing shift.

Global methanol production at the end of 2022 was approximately 30,000 tons. Maersk alone would need nearly 1 million tons to operate its new ships for a year. Nearly two years later, the supply glut has not improved, and the price of green methanol available is nearly twice as much as bunker fuel.

Green methanol is a term used to describe the output of liquid methanol produced using renewable energy, most frequently solar or wind power. For the time being, its production remains limited, which translates to higher prices. As a result, Maersk is shifting to adding new vessels to its fleet that run on liquefied natural gas (LNG) despite having promised to avoid LNG-powered vessels in the past.

The transition to clean maritime shipping is a costly undertaking. Clarksons Research puts the price tag at over $3 trillion for a switch to new forms of power. The effort to produce alternative fuels at the scale needed for global shipping remains vastly underdeveloped, leaving shippers like Maersk with few options. LNG vessels emit 25% less carbon than bunker oil-fueled ships but more than methanol-powered ships, which emit no carbon dioxide.

The shipping industry’s carbon emissions target is to cut emissions in half by 2050 as compared to 2008 levels. The United Nations maritime regulator, the International Maritime Organization, monitors progress, and shipping companies like Maersk have their own goals.

Adding LNG vessels is not expected to derail Maersk from meeting its goal of a carbon-neutral fleet by 2040. However, an alternate route to a carbon-neutral future was required in a year marked by geopolitical challenges and higher operating costs.

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Maersk Predicts Prolonged Trade Disruptions into 2024 Amid Red Sea Conflict

August 2nd, 2024 Tim Jay Leave a comment

Global trade disruptions caused by the ongoing conflict in the Red Sea are anticipated to persist throughout 2024, according to A.P. Moller-Maersk A/S, a key indicator of global trade health. This statement coincided with Maersk’s third consecutive financial guidance upgrade within three months, driven by rising freight rates bolstering the company’s profits.

On August 1, Maersk adjusted its forecast for underlying earnings before interest, tax, depreciation, and amortization to a range of $9 billion to $11 billion for this year, up from the previous estimate of $7 billion to $9 billion. Analysts had predicted an average of $8.76 billion, based on Bloomberg’s compiled estimates.

The Danish shipping giant had previously increased its annual profit outlook in May and June, citing greater-than-expected impacts of Red Sea congestion on global supply lines. Maersk now projects this disruption to extend at least until the end of 2024.

Attacks by Houthis have rendered the Suez Canal unsafe, leading to a significant 77% reduction in container ship traffic through the vital route compared to the previous year, according to Bloomberg Intelligence. Consequently, ships are rerouting around Africa, increasing vessel capacity requirements and elevating freight rates amidst a post-pandemic market slump with an oversupply of ships.

Maersk highlighted ongoing high volatility in trading conditions due to the unpredictability of the Red Sea situation and uncertain supply-demand dynamics in the fourth quarter.

The company also revised its 2024 global container trade growth forecast to 4% to 6%, up from the previous upper range of 2.5% to 4.5%. Additionally, Maersk now expects free cash flow in 2024 to be at least $2 billion, doubling the earlier projection of at least $1 billion.

Despite an initial 4.2% rise in Maersk shares in Copenhagen, they later traded 0.7% lower by 3:06 p.m. local time. Brian Godsk Borsting, chief analyst at Danske Bank Credit Research, noted that the strong rise in container freight rates in recent months made the guidance upgrade somewhat anticipated.

Maersk also released preliminary second-quarter revenue and profit figures ahead of the full report due on August 7, which fell short of average analyst estimates.

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Maersk Settles Whistleblower Retaliation Case with U.S. Department of Labor

July 29th, 2024 Tim Jay Leave a comment

Maersk Line Limited, the operator of the largest U.S. flag commercial fleet, has reached a settlement with the U.S. Department of Labor regarding a whistleblower retaliation case. The settlement requires Maersk to revise its safety reporting policies and compensate a mariner who was terminated for reporting safety concerns to the U.S. Coast Guard.

The case originated from a December 2020 complaint by a mariner aboard the Safmarine Mafadi, a container ship. The mariner reported several safety issues, including faulty lifeboat equipment, potential alcohol consumption by crew members, inadequate supervision of cadet seamen, and a malfunctioning bilge system. In response, Maersk suspended and later terminated the mariner in March 2021 for not notifying the company before contacting regulatory agencies.

The Department of Labor’s Occupational Safety and Health Administration (OSHA) investigated and found that Maersk’s policy violated the federal Seaman’s Protection Act, which safeguards mariners’ rights to report safety concerns directly to authorities without employer retaliation. A three-day hearing in June upheld OSHA’s findings, leading to the settlement.

As part of the agreement, Maersk will eliminate the requirement for workers to inform the company before contacting the U.S. Coast Guard, refrain from retaliating against seamen who report safety concerns, train supervisors on the revised policy, and distribute OSHA’s Seaman’s Protection Act Fact Sheet to seamen on its U.S. flagged vessels for two years. Additionally, Maersk will compensate the terminated mariner for lost wages and damages.

Maersk Line Limited maintains that the termination was due to the mariner’s failure to report unsafe conditions to the company promptly, in accordance with its policy. The company also noted that an arbitrator and the Coast Guard found the mariner’s allegations unsubstantiated and motivated by personal reasons.

This case underscores the importance of mariners’ rights to report safety issues directly to the U.S. Coast Guard and reinforces the need for collaboration to ensure maritime safety. Maersk Line Limited, headquartered in Norfolk, remains a significant player in the U.S. maritime industry, operating a large fleet and employing about 700 U.S. mariners.

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Maersk Resumes Direct Services to Baltimore Amid Port Updates

May 19th, 2024 Tim Jay Leave a comment

A.P. Moller-Maersk (Maersk) has announced the reopening of bookings for direct loading and discharge at the Port of Baltimore. The company provided updates on its AGAS and AMEX services, detailing specific voyages now available for booking.

AGAS Service:

1. Imports to Baltimore: Dubai Express 421N – ETA June 1 (departing Cartagena, CO – May 19; departing Manzanillo, PA – May 20)
2. Exports from Baltimore: Dubai Express 422S – ETD June 1

AMEX Service:

1. Imports to Baltimore: Nele Maersk 417N – ETA June 11 (departing Cape Town, SA – May 23)
2. Exports from Baltimore: Nele Maersk 422S – ETD June 11

Bookings for Transatlantic services and Baltimore exports on TP12 remain closed, pending further information on channel conditions. Imports from Asia to Baltimore are currently accepted but are subject to space availability.

Maersk highlighted that AGAS and AMEX bookings are possible as their vessels can utilize the Fort McHenry Limited Access Channel, which is not accessible for vessels on transpacific or transatlantic routes. A representative emphasized that the situation at the Port of Baltimore is fluid, with bookings contingent on space availability and the official reopening of the port or the alternative channel. Vessels may be redirected to another USEC port if necessary.

In related news, Maersk has recently inaugurated a dedicated cross-dock warehouse in Rotterdam at the Maasvlakte II terminal.

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Maersk Adjusts Surcharges Amid Escalating Red Sea Risks

May 8th, 2024 Tim Jay Leave a comment

Recent developments in the Red Sea have prompted Maersk Line to implement surcharge adjustments and reroute vessels, signaling heightened concerns for maritime security and operational costs.

Abdul Malik Al-Houthi’s announcement of escalated operations in the Red Sea has raised alarms, with Maersk Line noting an expansion of the “risk zone” and increased attacks reaching further offshore. As a response, Maersk has revised its peak season surcharge on the Asia-North Europe route, tripling it from $250 per TEU to $750 per TEU starting from May 11th.

The situation in the Red Sea has already led to a significant loss of capacity for Maersk, estimated at between 15% and 20%. This loss, coupled with a 13% drop in revenues in Q1, has compelled the Danish carrier to reroute vessels around the Cape of Good Hope for the foreseeable future. While this measure prioritizes the safety of crew, vessels, and cargo, it incurs additional time and costs for cargo delivery.

The entry of Iranian military personnel into the Red Sea theatre, exemplified by the recent hijacking of MSC Aries, has further complicated matters. Maersk has highlighted the knock-on effects of this situation, including bottlenecks, vessel bunching, delays, and shortages in equipment and capacity.

Israel’s recent attack on an Iranian airbase, in response to an earlier Iranian airstrike, has added another layer of tension to the region. While Minister Miri Regev asserts that Israel’s message was received, security experts like Hans Tino Hansen of Risk Intelligence evaluate the Houthi and Iranian threat cautiously. While the Houthis could potentially expand their reach with Iranian support, such actions may incur diplomatic consequences, particularly against US and UK-related vessels.

Maersk emphasizes that diversion around the Cape of Good Hope increases fuel consumption by 40% per ship, hinting at possible future alterations to surcharges to offset these additional costs. Regular review of surcharges is assured to keep customers informed of any changes.

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Maersk Warns of Continued Red Sea Disruptions, Affecting Global Shipping Capacity

May 7th, 2024 Tim Jay Leave a comment

A. P. Moller Maersk, a leading container shipping company, has issued a stark warning about the ongoing disruptions in the Red Sea, indicating significant repercussions for the industry’s capacity in the second quarter.

Recent attacks by Iran-aligned Houthi militants have escalated tensions in the region, prompting Maersk to project a notable reduction of shipping capacity between the Far East and Europe by 15%-20% in the coming months. These disruptions force vessels to take longer routes, resulting in increased voyage times and freight rates.

Since December, Maersk and other shipping companies have rerouted vessels around Africa’s Cape of Good Hope to circumvent the risk zone in the Red Sea. However, the expanded threat area and persistent attacks have extended journey times, amplifying costs and logistical challenges.

Maersk anticipates that these disruptions will persist until the year’s end, leading to bottlenecks, vessel congestion, and shortages of equipment and capacity. In response, the company is implementing measures to enhance reliability, including faster sailing and the addition of capacity, with over 125,000 additional containers already leased.

The ongoing disruptions in the Red Sea are part of a broader geopolitical context, with tensions in the region heightened by recent strikes targeting Iran’s nuclear facilities. Despite efforts to safeguard shipping lanes, the continued disruptions underscore the profound impact on global trade and shipping operations.

As the industry navigates these challenges, Maersk’s warning serves as a reminder of the complex interplay between geopolitical tensions and maritime commerce, highlighting the urgent need for strategic solutions to ensure the stability and resilience of global supply chains.

Maersk Unveils SAR 1.3 Billion Logistics Hub at Jeddah Islamic Port: A Major Milestone in Saudi Arabia’s Global Supply Chain Ambitions

AGAS Service:

AMEX Service:

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