Maersk planning for tariffs to hit hard in 2019

Maersk ocean freight shipping cargo on cloudy day

November 16, 2018 - It's been an eventful year for Maersk. The company finalized a merger with Damco, launched the blockchain platform TradeLens with IBM, integrated Hamburg Süd and introduced instantaneous digital booking.

But CEO Søren Skou said investments are likely to slow down next year as the company deals with the challenges at hand and works to reduce its debt and grow existing secondary services like supply chain management, warehousing and distribution. 

"The fact that we're underweight market share wise in the Pacific is actually something that comes in quite handy right now," said Skou on the call. 

Tariffs are hurting back haul revenue out of the U.S., said COO Søren Toft, but with tariffs on $200 billion in imports from China set to increase from 10% to 25% in January, carriers are bracing for volume dips. 

But tariffs are just one challenge coming to the industry next year. 

Lower sulfur emissions standards handed down by the IMO go into effect in January 2020; next year will be the time where carriers have to ready their fleets with scrubbers to clean the exhaust or prepare to change their fuel sourcing.

Maersk, along with several other carriers, has announced new fees to cover the cost of the upgrades and Clerc said customers are taking it well — despite accusations of profiteering.

"The discussion with customers will be around that bunker adjustment formula, not a discussion around the number of scrubbers or how this is being impacted. We have no visibility on that at this stage anyway. So we have given the formula already to the market," said Clerc on the same call, describing initial conversations with customers as "quite positive."

Source: Supply Chain Dive