Growth Strategies of Major Maritime Operators

MSC vs. Maersk Line

Founded in 1970 by Gianluigi Aponte (a Merchant Navy Captain), MSC began its operations with a single cargo ship. On January 5, 2022, 52 years after its founding, MSC became the world leader in terms of capacity in the container shipping market. This marked a historic day in shipping as MSC dethroned Maersk Line, which had held the lead for 23 years. Maersk Line, a company with a secular background, was founded in 1886 by another Merchant Navy Captain, Peter Maersk Moeller. Since 1999, after acquiring Sealand (the company of the legendary Malcolm McLean - the creator of containerization), this title had belonged to Maersk Line.

With an aggressive growth strategy based on the acquisition of other maritime operators, Maersk's market share reached 18.2% in August 2005 (the time of the acquisition of P&O Nedlloyd), while MSC only represented 8.2%. In 2017, facing MSC's continuous increase in market share, Maersk acquired Hamburg Sud (specialized in N/S traffic, with a particular focus on the South American continent). With this acquisition, Maersk held nearly 19% market share compared to MSC's 14.6%, its partner in the 2M Alliance.

As of January 1, 2024, MSC has a fleet of 799 ships with a cargo capacity of 5.608 million TEU (19.8% market share). Maersk Line, dethroned from leadership, has 675 ships, representing 4.116 million TEU (14.5% market share).

Soren Soft, the current CEO of MSC and formerly the leader of Maersk Line, continued the endogenous growth strategy (through acquisitions of second-hand ships, new orders in shipyards, and ship charters) initiated by MSC's Chairman. MSC's initial growth was associated with Aponte's vision in buying and selling ships. Only in 1994 did MSC order its first new ship from a shipyard. Until then, its entire fleet had been acquired second-hand.

Interestingly, from 2020 to 2024, the acquisition of second-hand ships once again underpinned MSC's fleet capacity growth. Hundreds of second-hand ships were acquired, some of which had valid charter contracts with MSC itself. In market jargon, MSC buys all container ships regardless of size or age. With the market booming, coupled with successive supply chain disruptions, "everything that floats and carries containers makes money."

Simultaneously, MSC is also the maritime operator with the largest order book for new ships, totaling 1.472 million TEU (as of January 1, 2024).

MSC's participation in TIL (Terminal Investment Limited) and its preferential international agreements with PSA – “Port of Singapore Authority” also grant it significant relevance in port operations.

MSC's next step, after consolidating its market leadership, is to follow Maersk's supply chain integration strategy. It has made public offers to acquire the Bolloré Africa Group (specialized in port operations) and Log-In Logistica Brasil.

Main Maritime Operators - 1st. january 2024

Regarding Maersk's growth strategy, according to Vincent Clerc, the new leader of Maersk, the company's goal is not to be the largest global shipping operator, but rather the most profitable. To achieve this, Clerc believes that Maersk should stop being merely a shipping carrier and instead position itself as a major global freight integrator.

To reach this goal, Maersk has adopted a more conservative fleet expansion program. After being the pioneer in 2013 with 18,000 TEU vessels – "Triple E", Maersk currently has only 37 new ships on order, representing 458,000 TEU. Eight of these ships are 16,000 TEU methanol-powered vessels, in a deal valued at 1.4 billion dollars.

According to its CEO, Maersk has shifted its growth strategy from an "aggressive growth" model to a "growth with the market" model. This ensures fleet expansion in line with market growth, maintaining its market share stable at 15%, and strategically investing in other higher value-added areas of the supply chain.

One of these areas is port operations. APM Terminals is owned by the Maersk Group and is the third-largest port operator globally. This reflects the new philosophy of Maersk; the company doesn't just want to move containers from one port to another. It aims to offer an attractive value proposition to its customers, particularly by being an integral part of end-to-end logistic solutions.

However, this strategy has brought some challenges in the market. Maersk's major customers question whether the company is becoming a competitor to its own clients by seeking to enter new value-added areas of the supply chain. An example of this is DB Schenker, which decided to break its traditional connection with Maersk and turn to MSC for its maritime distribution services.

Supply Chain Integration

CMA-CGM vs. COSCO

Also vying for the position of the 3rd largest maritime cargo operator worldwide, the competition is fierce. CMA CGM (a French operator) continues its ambitious expansion and fleet renewal program, decisively betting on LNG to reshape the energy paradigm in maritime transport (IMO 2020).

The CMA-CGM fleet (France) has shown significant growth in cargo capacity, anchored by the delivery of new 23,100 TEU ships and 15,000 TEU LNG (dual-fuel) ships. As of January 1, 2024, it operates a fleet of 625 vessels with a capacity of 3.578 million TEU, making it the third-largest maritime cargo operator globally.

In 1996, Jacques Saadé acquired CGM (Compagnie Générale Maritime) during its privatization process. A French entrepreneur of Lebanese descent, with a profound vision for the sector, he quickly initiated an aggressive policy of acquisitions and mergers to make CMA CGM one of the world's largest maritime operators.

Despite his visionary approach, Jacques Saadé couldn't anticipate the intensity of the crisis that hit the shipping industry from October 2008 onwards. The growth strategy through mergers/acquisitions led to high over-indebtedness for CMA CGM.

Facing a liquidity shortage to meet its commitments, it sought a credit line from the French government, as well as debt renegotiation with its creditors. Jacques Saadé's strong connections to the Arab world (recall his Lebanese descent) facilitated the entry of the Yildirim Family Group (Turkey) into CMA CGM's capital in 2010. By acquiring 20% of CMA CGM's capital, the Yildirim Group injected $500 million, which was crucial in meeting the company's short-term obligations.

The shipping market's recovery, coupled with capital injection from the Yildirim Group, enabled the beginning of CMA CGM's financial recovery. Currently, CMA CGM has 110 orders for new ships in shipyards, representing a cargo capacity of 1.198 million TEU (the 2nd largest order book just behind MSC). In the long run, based on the order book, it's foreseeable that CMA CGM will surpass Maersk and become the number 2 in the containerized maritime cargo transport market. It also has a significant presence in port operations, being the 8th largest port operator globally.

CMA CGM has also been at the forefront of Strategic Alliances in the sector. In response to its exclusion from the P3 and the formation of 2M, CMA took the lead in the "Ocean Alliance", with the Chinese COSCO (who had acquired OOCL) and Evergreen (Taiwan). It's one of the most dynamic alliances in the shipping market.

In 2016, COSCO and China Shipping (China's largest shipping companies) merged into a single entity. The traditional Chinese model, where companies are state-owned and compete against each other, was not competitive against the world's major container shipping operators.

Size became a critical success factor in the containerized maritime cargo transport market, and the synergies between the two operators were evident. Starting with both being mostly owned by the same shareholder, the Chinese government itself. Many market analysts even considered that beneath the non-approval of the P3 Alliance by the Chinese Competition Authorities was a protectionist logic to defend Chinese maritime operators.

In 2018, in a relentless pursuit of economies of scale, COSCO also acquired Orient Overseas Container Lines (OOCL), in a deal valued at $6.3 billion. At that time, COSCO became the 3rd largest container maritime cargo operator, just behind MSC and Maersk.

As of January 2024, COSCO's shipyard order book amounts to 837.5 thousand TEU (27.4% of its current fleet capacity). Highlighted are 12 orders for dual-fuel (methanol) 24,000 TEU ships, with a unit acquisition value of $240 million.

Main Maritime Port Operators

Currently, COSCO has focused on the port operation sector (where it dethroned PSA as the world's largest port operator), but it has been surpassed again by CMA CGM, which continues with an ambitious program of fleet expansion and renewal. Consequently, CMA CGM has regained its position as the third-largest container shipping operator globally, a position it has traditionally held.