WINNER of last quarter Maersk
The coronavirus pandemic seems to have been far from detrimental to Maersk, the world’s largest container shipping company, over the past year. In the fourth quarter of 2020, the Danish company’s gross operating profit (EBITDA) increased by a whop- ping 96% to US$2.2 billion, thanks to a combination of explosive rises in transportation prices and a fall in fuel prices. Over the whole of 2020, the firm’s gross operating profit grew by more than 47% to US$6.6 billion. Ship- ping companies were forced to reduce capacity and cancel sailings due to the slump in demand for container ship- ping during the 2020 lockdown period. As a result, shipping prices remained surprisingly stable, then skyrocketed when demand picked up again. For example, the price on the spot market to transport a container from China to Europe rose from US$2,000 to US$10,000, with peaks at even higher amounts, according to reports in the Dutch financial newspaper Financieele
LOSER of last quarter Heineken
Beer brewer Heineken is cutting 8,000 jobs worldwide, which equates to almost 10% of its total workforce. The restructuring is part of the group’s pro- gramme to save €2 billion in costs over the next three years. Heineken revealed the plans in the second week of Febru- ary when announcing its annual results. In 2020, the brewery group’s net turno- ver fell by almost 12% to €19.7 billion, resulting in a net loss of €204 million. Heineken has been hit hard by the COVID-19 pandemic and in particu- lar by the enforced closure of bars and restaurants for much of the past year. Higher beer sales in the retail channel could not compensate for the revenue losses in the lucrative food service chan-
nel. The outlook remains bleak since many hospitality outlets are still shut, so Heineken does not expect to see a recovery until the second half of this year at the earliest.
In addition to scrapping 8,000 jobs, the brewer announced that it will reduce its product range and cut production and logistics costs in order to achieve its cost-savings target of €2 billion. In the Dutch financial newspaper Finan- cieele Dagblad, Dolf van den Brink, Heineken’s new CEO, is quoted as say- ing that flexibility is essential: “Ulti- mately, it’s not the biggest or strongest companies that survive, but the most flexible. (...) Heineken had become accustomed to success. Until February
last year, business was booming. The danger is that it makes you less flexible. Your approach works, so you stick to it. We now have to break away from that.”
Dagblad. The lockdowns also created shortages of empty containers in vari- ous parts of the world, which drove prices up even further. However, the average increase in the transport price remained lower because much of Mae- rsk’s work is based on long-term con- tracts.
The developments in the container market attracted criticism from ship- pers and forwarders due to the price hikes and the reduced reliability of the sailing schedules. At the end of last
year for example, in a new all-time low, only half of the ships arrived at the port on time. Therefore, parcel delivery company DHL and the Dan- ish third-party logistics provider DSV have themselves started to charter smaller ships that would not normally be used for container shipping. This is reportedly the first time in history that customers are bypassing major ship- ping companies to arrange their own container transport on the key routes between China, Europe and the USA.
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SUPPLY CHAIN MOVEMENT, No.40, Q1 2021
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