September 8, 2009

Maersk Logistics, Damco make it official

After operating as a single business unit for over a year, the global 3PL and international freight forwarder formalized their union Monday.

By Toby Gooley

For some time, the once-sharp lines between transportation and logistics, domestic and international, and third-party logistics (3PL) companies and freight forwarders have been blurring. Mergers in these areas have accelerated that trend by melding complementary services into a one-stop shop that meets customers' increasingly diverse needs.

The latest example is the combination of Maersk Logistics, a global 3PL, and Damco, an international freight forwarder, under the Damco brand. The two had been operating side by side since Denmark's A.P. Møller-Maersk Group acquired Damco during its buyout of P&O Nedlloyd in 2005.

The change, which took effect Sept. 7, is something of a formality. Although they operated separately, Maersk Logistics and Damco had been capitalizing on operational efficiencies for nearly two years. In 2008, they became a single business unit, sharing management and back-office functions. Both operate on the same core IT and financial platforms, so customers are unlikely to encounter the technology gaps that have tripped up other logistics industry mergers.

The re-branding reflects the need to offer customers a wide range of services under a unified structure and identity, said Damco CEO Rolf Habben-Jansen in an interview. "The businesses were always complementary, and we were always explaining why we offered similar services but not under one name. It was not a very compelling story."

With 10,000 customers served through 272 offices in 93 countries, Damco now has a compelling story to tell, Habben-Jansen believes. "Our presence in many growing, emerging markets is very strong," he said. "China, India, Africa, and Latin America belong to our biggest organizations, so we have a lot of capabilities at the point of origin for shipments to the United States and Europe. We have been in many of those markets a long time, and we don't work with agents or third parties."

Why choose the name Damco instead of the better-known Maersk Logistics? Precisely because of the strength of the Maersk brand, it turns out. "It is very difficult to build up a separate identity under the Maersk name because the ship line is so strong," Habben-Jansen said. Potential customers and airlines often mistakenly assumed that the carrier-neutral 3PL and forwarder favored its parent company or only handled maritime business, he noted.

Damco's strategy for growth includes making the business more independent from the shipping line, investing more in air freight, and expanding capabilities in emerging markets, Habben-Jansen said. "This is all part of the normal plan we have been building on all along."

About the Author

Toby Gooley
Contributing Editor
Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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