Brand power wanes in era of container shipping super-groups
Maersk's decision to close Safmarine comes as little surprise, given the diminishing benefits of operating separate business units
When container shipping was highly fragmented, establishing a loyal customer base through a quality container line with a recognisable brand made sense, but these days economies of scale are paramount, and that invariably means folding smaller, regional subsidiaries into one into one big carrier with global reach
SAFMARINE epitomised the power of the brand for many years, a name that was familiar well beyond the confines of the shipping industry, and one that delivered genuine value to the bottom line.
Those were the qualities that Maersk recognised when it acquired Safmarine in 1999, the year that it bought the US giant Sea-Land. While the latter provided scale and catapulted Maersk into the premier league of container lines, Safmarine gave the Danish group access to a market that it had found hard to penetrate.
Safmarine, which dates back to 1946, is a household name across southern Africa, and its Big Whites — for a while the largest containerships in service — were also four of the most well-known ships in the world, popular with both passengers and shippers.
And it was those strong relationships with cargo interests that appealed to Maersk, which recognised the need to keep the name to retain customers.
So while the Sea-Land name was quickly absorbed into Maersk Sealand for a brief spell, and the P&O Nedlloyd name was dropped not long after the Danish group acquired two iconic names in yet another takeover, the Safmarine name survived within the group for more than two decades.
The carrier was kept at arm’s length from Maersk Line for many years, with separate management and its own headquarters in Antwerp, but gradually more and more activities were integrated into those of its much larger sister company until there was, quite literally, just the name that was left.
So Maersk’s decision to fully absorb the brand by the end of the year came as no real surprise. Maersk has never been one for sentimentality. Sound business reasons would have been behind the decisions to kill off the Safmarine name.
Those Safmarine staff that had built up such a loyal following among customers have probably mostly retired, while Maersk has had long enough to establish its own reputation in southern Africa.
Furthermore, retaining separate units and organisational structures is expensive and few lines can afford any additional costs right now, even one as financially strong as Maersk.
CMA CGM, which has long espoused the benefits of operating separate lines within its portfolio — and won plaudits from Maersk a few years ago for its brand strategy when the Danish group revived the SeaLand name — has even started to change tack.
One group that still operates several different lines is Grimaldi Group, with subsidiaries such as Atlantic Container Line, Finnlines and Minoan Lines,
The Italian group has chosen to keep its various acquisitions as separate identities in those markets where Grimaldi did not have an established presence, and also to capitalise on the individual strengths and trade specific expertise of each. However, that strategy will again be based on a solid business case that works for now.
Most of the pioneers of containerisation have long since disappeared or become little more than a name on the side of the box. Industry expert Lars Jensen estimates that of the top 20 lines in 1980, only five are still in business in their own right, with many other once powerful names now simply subsidiaries.
Of those, there is one in particular that has survived so far, but must be questioning its future.
When Maersk bought Hamburg Süd in 2016, it promised to retain the German line’s Hamburg head office and keep what is regarded as one of the most prestigious names in the industry.
But as the Danish group goes through yet another reorganisation, the Hamburg Süd brand looks likely, sooner or later, to become yet another casualty of the ruthless world of container shipping.