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May 14 2018

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16 The Journal of Commerce | May 14 2018 International Maritime "global integrator of container logis- tics" within three to fi ve years, akin to a FedEx or UPS for ocean freight. "Amazon is a threat if we don't do a good job for them," Maersk Group CEO Soren Skou told Bloomberg. "If we don't do our job well, then there's no doubt that big, strong companies like Amazon will look into whether they can do better themselves." Maersk's announcement was a thunderbolt in its declaration that the world's largest container would embrace a radically di erent, digitally THE DECISIONS BY CMA CGM and Maersk Line to expand beyond trans- portation and into areas of logistics long dominated by forwarders and contract logistics providers mark a strategic departure for ocean carriers. It's entirely unclear whether these moves will be followed by similar deals by other container lines. The third-largest global carrier CMA CGM announced in April that it will take a 25 percent stake in CEVA. Just a few months earlier, Maersk Line declared its strategy to become the driven business model, forcing other carriers to take notice if not to respond. The moves by CMA CGM and Maersk come in the wake of a trend of carriers selling or being more distant in proximity to their logistics a liates. When the three Japanese carriers merged into the Ocean Network Express, or ONE, on April 1, Yusen Logistics, as part of the NYK Group, became just a unit owned by one of the ONE owners, thus a more distant corporate relative. Singapore-owned NOL Group in 2015 sold APL Logistics to Japan's Kintetsu World Express ahead of the sale of APL to CMA CGM in late 2016. Damco, the Maersk logistics business, had struggled to become profi table to the point that many believed it was being nursed back to health with the objective of selling it. Carriers in general have been withdrawing from providing inland services and are happier just to provide port-to-port transits, seeing inland repositioning costs as hard to recoup from shippers. Moreover, there have been no SIX WEEKS AFTER the new Ocean Net- work Express went live, the carrier's CEO and one of its largest customers have shrugged o reports of chaotic booking procedures, poor communica- tions, and delays around the world. Sta shortages led to delays in response times in some geographies, ONE CEO Jeremy Nixon admitted, but he said vessels, landside operations, and IT systems were operating "as per original plan." "In some geographies customers have experienced some delays in response times and documentation availability, as a result of a temporary shortage in ONE sta during the company start-up period," he told The Journal of Commerce. "This situation is being urgently addressed and is expected to be resolved in the next few weeks, as we transition the last of the remaining 3J legacy sta across to ONE. As a further countermeasure we are also adding additional sta to our back-o ce centers, to accelerate response times." Media reports portrayed the ONE launch on April 1 that followed the container shipping division merger of Japan's NYK Line, MOL, and "K" Line as a shambles, with booking failures and desperate customers unable to contact local o ces. However, Paolo Montrone, Kuehne + Nagel senior vice president and head of global trades, said as a large partner of ONE, this wasn't his experience. "Are there service challenges here and there? Yes. Same as there are with basically any other carrier," he said. "The teams ONE has in place are working very hard to deliver a smooth integration of all legacy 3J services." The Journal of Commerce heard complaints of problems from half a dozen shippers and forwarders. "One container was put on hold in the system and couldn't be loaded" because of a system error, a US importer from Asia said. "That was the story I was given." The importer added that the restruc- turing of sales representatives made it harder to pressure known contacts to get information technology relief. As the new carrier rolled out its ser- vice o ering, the main focus in 2018 would be to ensure a smooth transition of the three Japanese carriers to the ONE network, and any hunt for new, value-adding landslide options would be left for 2019 and 2020, Nixon said at the 2018 TPM Conference in Long Beach in March. "2018 is all about ensuring a very smooth delivery and a smooth changeover from the three legacy companies to ONE," he said. In the build-up to the launch of ONE, concerns were expressed about the di culties of merging three carriers into one, as well as bridging sig- nifi cant corporate culture gaps among the three legacy carriers, something ONE up The rollout of Japan's Ocean Network Express sees some snags but CEO expresses optimism By Greg Knowler More carrier-forwarder wedding bells? CMA CGM-CEVA deal seen by some as puzzling, but strategy may prove fruitful By Bruce Barnard and Peter Tirschwell % CMA CGM 's announced stake in CEVA as of last month. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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