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October 15 2018

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16 The Journal of Commerce | October 15 2018 www.joc.com International Maritime CONTAINER LINE EFFORTS to move upstream and downstream into services that go beyond port-to-port ocean freight are beset by challeng- es from e-commerce giants and new startups also looking to better provide shippers the higher service e-retailing demands. "Business models are blurring," Ulrik Sanders, senior partner and managing director of The Boston Consulting Group, told attendees at The Journal of Commerce's Con- tainer Trade Europe Conference in Hamburg in September. "Lines are sick and tired of being stuck with heavy assets and not being accretive on non-asset services." Sanders said legacy forwarders currently have the lowest costs based on their ability to negotiate attractive freight rates from carriers, while a new breed of digitally oriented forwarders tend to have an edge in customer ser- vice. He specifically noted that Flex- port, which BCG has studied carefully, is better than traditional forwarders in terms of user experience online and customer service. Carriers not only feel confined by the limited scope of their product offerings, but they also see non-as- set-owning competitors honing in on areas that are potentially more lucrative. The most recent example of carriers' attempts to expand their reach comes from Maersk, which announced a major restructure on Sept. 19 involving the splitting of its freight forwarding and supply chain services subsidiary Damco into two entities, folding two regional carriers into another, SeaLand; and decentral- izing regional decision-making. Ocean carriers, meanwhile, have the ability to integrate logistics ser- vices with their ocean products. "We have no intentions of declaring war on one-third of our customers," Karsten Kildahl, CEO of Maersk Line, Europe, said at CTE. "We want to integrate more with forwarding partners. Some customers choose to go with carriers directly, some go with forwarders. Sometimes we need to build a solu- tion for shippers, and sometimes we need to build solutions to work with the forwarders." "Integrators are moving up the chain — they used to focus on last mile, but more and more are focusing on Blurred lines Challenges face ocean carriers expanding logistics offerings in an e-commerce world By Eric Johnson The money new entrants invest into digitalization stands in contrast to investments carriers have made, in that liner returns on sales and assets have been "horrible." Shutterstock.com Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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