Maersk SWOT & PESTLE Analysis

Strength

1. Global network of businesses: Maersk has operations in 130 countries with Maersk Line, the group’s primary transportation & logistics business having 15.8% global market share. Its two main industries are transportation & logistics and energy. Transport & Logistics consists of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry. The mission of these businesses is to enable and facilitate global supply chains and provide opportunities for customers to trade globally. Energy consists of Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers. After the Hamburg Sud acquisition gets completed by FY17, Maersk will further increase its network and market share in East Coast South America trade.

The remaining section under "Strength" is available only in the 'Complete Report' on purchase.

Weakness

1. Loss reported due to impairments: Even in difficult times, the Maersk Group delivered a profit of USD 5.2bn and an underlying profit of USD 4.5bn in 2015. The Group delivered a strong cash flow from operating activities of USD 8.8bn in 2015 despite a significant decline in container freight rates and oil prices. However the results were unsatisfactory in 2016 majorly impacted by post-tax impairments of USD 2.8bn which resulted in an overall loss of USD 1.9bn. These impairments were to primarily relating to Maersk Drilling and Maersk Supply Service.

2. Fluctuating margin and rising costs: Maersk has often missed earnings forecast and lost market share due to uncertainty in the industry and fluctuating demand. But in spite all this, it has managed to the most profitable operator amongst other players in the industry. Also, due to the global economic conditions. Logistics cost has increased manifold for the company. But steps are being taken to bring down the cost and safeguard the profitability of the company even in these challenging times.

Political

This section is available only in the 'Complete Report' on purchase.

Economic

This section is available only in the 'Complete Report' on purchase.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

1. Regulatory approvals delay decision making and business growth: Delay and uncertainty in regulatory approvals result in slowing down of growth and business integration. Maersk’s decision to acquire Hamburg Sud faced regulatory hurdles in Brazil, as Hamburg Süd owns Alianca Logistica, which is the dominant carrier in East Coast South America trade with 55% market share. Maersk already owns Brazilian flag carrier Mercosul Line and after Hamburg Süd’s acquisition its share would be between 75-80%. French carrier CMA CGM has entered into a deal with Maersk to acquire Mercosul Line, which will help in clearing regulatory approvals for Maersk’s acquisition of Hamburg Süd in Brazil. This deals are expected to be completed by Q4-FY17 if the approvals are granted as per the timelines.

Environmental

1. Inherent risk of major accident or oil spill: Maersk is involved in the operation of large container vessels which are subject to risks like accidents or technical glitches which may result in environmental disasters such oil spills. These incidents can threaten marine life and also affect the local communities and the overall environment. Moreover these incidents can affect Maersk’s brand value and incur large scale penalties. In 2016, Maersk Ahran was involved in a significant oil spill incident near Turkey, however the damage was largely limited due to the fast response of the local response team. Maersk needs to make appropriate investments in technology and manpower so that these risks are minimized.

2. Regulatory developments concerning environment: New regulations continue to be imposed to reduce the impact of business activities on the environment. These regulations impact Maersk’s business processes and additional measures need to be undertaken to comply with the same. By 2020, a global cap of 0.5% sulphur content in fuel is to be enforced. New ships which are being built after 2016 will need to reduce NOx emissions by 80% particularly in North American and Caribbean waters. There are also anticipated regulatory changes regarding ballast water exchanges in different water bodies which will require installation of ballast water treatment systems on board.