• Monday, October 15, 2018

Maersk Line Canada President shares insights on container sector

By BCShippingNews 27 September 2017
Jack Mahoney reflects on growth on the West Coast

When Jack Mahoney took over the role of President, Maersk Line, Canada, nearly two years ago, there was only one Maersk vessel per week calling on the West Coast of Canada. “Now, we have two per week,” he said. “And not only have we increased the frequency but the vessels are larger than they were a year ago.” Pleased with activities to date, Mahoney offered a few insights into the Canadian operations of the world’s largest container shipping company.

Photo above: Prince Rupert's Fairview Terminal (credit: Lonnie Wishart); Inset: Maersk Line Canada President Jack Mahoney.


To put its size into perspective, the global giant that is the A.P. Moller-Maersk Group, headquartered in Copenhagen, Denmark, can be found in 130 countries with about 88,000 employees and an annual revenue (2016) of US$35.5 billion. Since January 2017, the organization separated into two business streams: transport and logistics plus a stand-alone energy division. It is within the Transport and Logistics division that we find Maersk Line, along with companies like APM Terminals, Damco, Svitzer and Maersk Container Industry (the Energy Division consists of Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers).

Worldwide, Maersk Line employs over 30,000 people in 306 offices along with over 7,000 seafarers on more than 600 ships. It is the world’s largest container shipping company, carrying 12 million containers per year to 343 ports for over 59,000 customers. The business includes Safmarine, Seago Line, SeaLand and MCC, not to mention the Hamburg Süd acquisition that is working its way through the regulatory approval process and should be in place by the end of 2017.

With headquarters in Toronto and offices in Vancouver and Montreal, Canadian operations include regular service to and from Montreal and Halifax on the East Coast, and Vancouver and Prince Rupert on the West Coast.

Before coming to Canada to head up the operations, Mahoney started his career with Sea-Land in the early 1990s before moving to Maersk as part of the acquisition in 1999. He held a variety of sales, trade and sales management roles in Copenhagen and the U.S. that led ultimately to heading up the U.S.A’s forwarder sales group before accepting the position of President, Maersk Line, Canada, in October 2015.

While Maersk, including Maersk Line, made the news recently as one of several victims of the worldwide cyber attack at the end of June, the event was quickly addressed and operations were running close to normal within the span of 10 days.


Low freight rates, a fragmented market plus a few other factors meant substantial losses for container ship carriers in 2016, culminating in the bankruptcy of Hanjin in the Third Quarter — the worst possible time with European and North American retailers trying to get ready for Christmas. “$14 billion worth of cargo was stranded,” said Mahoney, describing an increased awareness from customers that they can’t take shipping for granted. “We’re seeing more customers realize that the record-low freight rates are not sustainable and there’s a need to pay closer to what shipping is worth to avoid future Hanjins.”

To help offset costs and increase efficiencies, Mahoney noted that there have been more mergers and acquisitions over the past two years than there have been in the last 20. “We think this is a positive trend and believe there’s room for even more,” he said, adding that vessel sharing agreements are also allowing companies to focus on reducing costs and improve efficiencies but, again, “there’s probably more that can be done.”

For their part, Maersk Line announced the acquisition of Hamburg Süd which should be complete by the end of 2017. “We are proceeding but the regulatory process is an ongoing one,” Mahoney said. “Through the acquisition, we expect to get operational synergies over the first couple of years once the transaction is complete. Hamburg Süd has a great reputation in the industry. They’re strong in the north-south trade, have a very good name with their clients and are very strong in the refrigerated and perishable goods market.”

Mahoney further touched on the digital transformation of the industry. “’The industry is on the cusp of digital transformation, requiring logistics and transportation providers to have a better understand and use of technology and data to enhance visibility and easy of business to their customers.” Noting that the Maersk Line website generates more than a million dollars in revenue per hour and has a quarter million users annually (19,000 on an average day), Mahoney pointed out the many benefits of a greater digital presence, including time and cost advantages as well as greater accuracy and easier access to information for the customer.

Technology advances are also playing a role in the vessels themselves to the benefit of the environment and operating costs. With 27 new builds on order (the majority of these are set to replace older, less efficient vessels), Mahoney highlighted some of the technologies and initiatives that were optimizing operations. “There’s a lot going on,” he said. “Everything from vessel designs that capitalize on more efficient container capacity to safe and efficient voyage planning through to the type of hull paint being applied. It’s all focused on using the knowledge and technologies out there to provide for greater environmental sustainability and cost efficiency.”

Operating in Canada

Globally, Mahoney estimated a two to four per cent growth rate for 2017 for the container sector and noted that the year was off to a good start with growth in the First Quarter at about five per cent. “Canada is at the higher end of this scale,” he said. “Our own performance is seeing import and export growth greater than 15 per cent for Canada and there are many opportunities to build on that.”

In addition to East Coast service through ports in Montreal and Halifax for regular weekly sailings to and from Northern Europe, Maersk’s West Coast service to and from Asia includes a Vancouver-Seattle route as well as a Prince Rupert-Vancouver sailing. As mentioned previously, both frequency and vessel size have increased for West Coast activity.

Mahoney attributed the positive numbers to Prince Rupert’s Fairview Terminal and Vancouver’s Centerm and their intermodal connections to the U.S. which are viewed very favourably. “U.S. demand has a lot of relevance for Canadian port activity because of the CN Rail connections in both Prince Rupert and Vancouver which is facilitating increased activity to the U.S. mid-west.”

While vessel size is averaging about 4,600 TEU for the Vancouver-Seattle service and 7,000 TEU for the Prince Rupert-Vancouver service, Mahoney said
that they’re always looking for ways to optimize the network but as demand increases, so too will the size of the ships provided infrastructure at the ports is ready for bigger vessels. “One of the benefits of the West Coast is the water depth — it’s never been a concern,” he said. “We’re also really pleased to see the progress being made at Fairview Terminal with the addition of a second berth and we know that Centerm, where we have two of the three main berthing windows, is also planning for an expansion.”

When asked about the regulatory environment in Canada, Mahoney had nothing but encouraging remarks. “It’s only been positive for us. We’ve always found the operating environment in Canada to be very fair. It has allowed us to adapt to the needs of our customers — the operating model is conducive to implementing those needs relatively simply.”

While hesitant to forecast the market any further out than the current year, “Canada’s focus on growing the economy through trade seems to be supported by a great portion of the population and we enjoy playing a role in facilitating that growth.”