Nurturing South African ties
Safmarine serves its long-time base while benefiting as part of behemoth Maersk.
By Chris Dupin
This summer marked the 10th anniversary of Safmarine's purchase by A.P. Moller – Maersk.
The former South Africa carrier has grown rapidly under its Danish parent, moving about 1.5 million TEUs annually on a fleet of about 20 owned and 19 chartered containerships, up from about 380,000 TEUs in 1999.
'The company and our customers get the benefit of being part of a large organization while we still retain a lot of independence, creativity, and the ability and freedom to do things to grow the business, satisfy our customers and produce profits,' said John Boudreau, president of Safmarine Inc., the company's U.S. subsidiary. 'The company is 63 years old so it has quite a history, but the last 10 years is quite a quantum leap as far as growth and reinvigoration of the brand.'
In terms of overall U.S. container trade Safmarine is relatively small, with only about a 1 percent to 1.5 percent market share in all trades. It is a bigger player on selected trade lanes, including those touching Africa, the Middle East and India.
Boudreau said the company moves about 28 percent of the trade between the U.S. and South Africa, and together with Maersk about 40 percent to 45 percent of the West African market. Safmarine is also a major player in the trades between Africa and Europe and Asia.
Maersk decided to preserve the Safmarine brand, he said, because of its high profile in Africa and 'it's a great business model that we have within the A.P. Moller – Maersk group to be able to take two bites of the apple and approach customers from two different angles, different philosophies about what those customers are looking for in transport.'
At the same time it gets the benefit of access to the Maersk network and the economies of scale that the world's largest container shipping company affords.
Though it has deep roots in Africa, Safmarine is actually headquartered in Belgium, a reflection of Safmarine's 1996 acquisition of CMB Transport. (Safmarine had actually owned a 49 percent stake in CMBT since 1991.)
It has expanded globally, with growing involvement in east-west as well as north-south services.
'Safmarine has often specialized in midsize companies as well as some of the household name companies that we all know. But the relationships that have built within Safmarine many of them had their roots in the original company,' Boudreau said. 'We are not big enough to cater to everyone.'
When it works with big companies ' say with the Big 3 U.S. automakers ' 'we're generally going after more the north-south business and Maersk is more involved in the east-west. It's not a fixed line of demarcation, but Safmarine's relationship with the auto manufacturers has always been based on the branches of those companies in South Africa,' he said.
'We work on a slightly different business model and approach to customers, not just Maersk, but the rest of the industry,' he said. 'We share the same IT systems and platform that Maersk does, we utilize the same operations and facilities, and in many cases we're loading on the same vessel at the same port terminals. The Maersk model of operational excellence is one that we benefit from, having as few exceptions as possible.'
|'Between us and our big brother (Maersk), we probably have 40-45 percent of the West African market,' Safmarine's John Boudreau said.|
Safmarine offers direct, fully containerized weekly sailings from the U.S. East and Gulf coasts to South Africa. Cargo to West Africa is often relayed via Mediterranean ports or Las Palmas in the Canary Islands. It serves East Africa, generally by transshipping through Durban in South Africa or Salalah in Oman.
Boudreau said the company tries to distinguish itself from competitors by offering intensive customer service.
'We will expend a lot of energy with our own people to protect our customers from any internal snafus or any problems we might have with a system. And if there are exceptions we deal with them as personally as we can to solve their problems.
'Our business is a little bit less predictable coming from a broader number of customers generally smaller in size,' he added.
The company can face challenging conditions in some ports, though he said the economic slowdown has given some a breather to catch up on growing volume.
Maersk has grown its fleet substantially in recent years, taking seven new vessels in 2008 and two earlier this year. No more are planned in 2009, but the company will add to its fleet in 2010 and 2011.
Safmarine has done better than many carriers during the downturn in container business this year, maintaining container volumes at the same level in the first half of 2009 as in the same 2008 period. But it is not unscathed; in late July it said it would withdraw from the transpacific at the end of June 2010, telling customers profitable participation in the trade lane was difficult because of its small size and poor conditions in the market.
'There is a huge tie-in between Safmarine and South Africa. The company began as a venture starting service between New York and South Africa. The roots run very deep we have in many cases South African officers,' Boudreau said.
The company has built a maritime academy in South Africa to train workers, and it has an active program called Containers in the Community, where it donates containers to build schools and other community facilities.