¡¡¡¡Early spring in 2008, Nils Smedegaard Andersen, CEO of Maersk Group and Eivind Kolding, CEO of Maersk¡¯s container shipping business, granted an interview with reporters in Beijing.

¡¡¡¡When the cost meets service quality

¡¡¡¡"We are equally providing quality services to our customers..."

¡¡¡¡"Despite the significant improvements we have made in our shipping business during 2007 as well as the USD 800 million more of net profit out of our container shipping, there is still more we want to do," Mr. Andersen commented.
¡¡¡¡Indeed, Maersk Group made up the deficits and started to bring in a surplus in its container business over 2007, with net profits increasing from a negative growth of USD 568 million in 2006 to USD 217 million. This year the Group's total revenue increased 17% to USD 51 billion, a 26% rise in net profit growth. A majority of the turnover came from container shipping and related supply industries, while oil and gas related businesses were the biggest profit earners. For 2008, Maersk is expecting total revenue of up to USD 60 billion.
¡¡¡¡The unsatisfactory profits are primarily the outcome of a flat global economic environment. "Being two globalised service industries, shipping and logistics fully depend on international economic circumstances," Mr. Kolding said. However those attempts to raise tariffs have already failed a number of times.
¡¡¡¡To this end, Maersk started a new business strategy in its major business: to integrate container ship capacity and raise their utility rate; to provide more reliable products based on customer¡¯s actual needs; to respond promptly and efficiently to customer¡¯s request; to reduce costs and simplify procedures. Mr. Andersen stressed that even with all these means to reduce costs, "We are still, as ever, providing quality services to our customers."

¡¡¡¡These are not "hard times"

¡¡¡¡"I find it difficult to forecast when the demand will actually arise, but we are well-prepared."

¡¡¡¡Maersk has fairly optimistic expectations for the future.
¡¡¡¡Maersk predicts that its container shipping volume in China will probably develop by 10% to 11% in 2008, and even 12% to 13% in 2009. On Pacific routes, 2% more than the previous volume will be heading East, which is obviously a bit down compared to previous double-digit growth. But at the same time, import volumes from the US to China are to increase. "However, this still seems a minor portion if compared with the amount exported from Asia. In this area, it is difficult to completely make up for the loss in tariffs," Mr. Kolding concluded.
¡¡¡¡Besides the concerns on changes in shipping volume, the whole shipping industry is also keenly aware of soaring oil prices. When it comes to the widely-concerned 29.2kn container carriers, Mr. Andersen says he would describe them as "definitely faster than the normal ones." However, taking into account today¡¯s high fuel prices, "they are sailing at a normal speed along normal routes." These high-speed carriers will replace part of the air transport market.

¡¡¡¡Extra benefit

¡¡¡¡"When we view environmental protection as well as energy saving also as ways to gain benefits, then there will not be any conflict between being environmentally friendly and our pursuit of profit."

¡¡¡¡Here are several figures shipping professionals are proud of: 90% of the global trade volume is accomplished by ocean shipping; carbon dioxide emissions by the maritime industry stands at merely 4% of the world¡¯s total, and the container transport only accounts for 0.5% of the 4%. This is why container shipping is considered as the most energy-saving and efficient mode of transport.
¡¡¡¡"Shipping consumes less fuel for us to ship a pair of shoes from China to countries of destination than for the customers who drive to the store and buy this pair of shoes on their own," Mr. Andersen said."When we view environmental protection as well as energy saving also as ways to gain benefits, then there will not be any conflict between being environmentally friendly and our pursuit of profit."
¡¡¡¡It is not the first time Maersk has advocated environmental protection.
¡¡¡¡Even when those large container carriers were still under design, emission control equipment had been taken into account already. And on the other end of the business chain, "apart from fully consulting the views of customers in modes as well as ways of transportation, we always recommend them those proposals with less carbon emissions." Mr. Kolding introduced. It is also an indispensible a step to measure the actual emissions of ships and, consequently, testing and supervision systems are currently being improved.

¡¡¡¡Reporter¡¯s Notes

¡¡¡¡"In my many visits to Beijing, it is the most beautiful weather today. How such brilliant sunshine will be agreeable for a forthcoming Olympic Games host city!"
¡¡¡¡This easy opening remark by Mr. Kolding shows the open stance Maersk has taken for the past. Since the second half of last year, no matter whether it is Tom Behrens-Sorensen, Vice President of Maersk Group, CEO of Maersk (China) Co., Ltd., Ni Guosen, Vice President of the Maersk Terminal, Director of the Greater China region, or Nils Smedegaard Andersen, Eivind Kolding, or Tim Smith, the newly-appointed Chief Executive of the Northern Great Asia region, executives in Maersk have been increasing the frequency of their appearances before the Chinese media.
¡¡¡¡And Maersk focuses each of its interviews mainly on China. Thus it is so proud to conduct the self-introduction: Compared with our peers, we have the most long-standing business relationship with China. We opened the first regular liners route linking the US to China early in 1928.
¡¡¡¡Some people would like to attribute Maersk¡¯s sound development in China to the solid strength of the whole Maersk group.
¡¡¡¡However for Mr. Kolding, it is just because "we have done something we deem correct in this booming market of China. For example, we have ordered a lot of ships, invested in terminals, trained professional personnel, and established a relatively good operating system. All these will contribute to our sustainable development in China."
¡¡¡¡At the same time, Tom Behrens-Sorensen interpreted this issue from another perspective: in China, Maersk has established a strong dialogue mechanism with the Ministry of Transport and the Ministry of Commerce, which appears "rather constructive".In addition, over the past four years, Maersk has actively supported China's State Development Research Centre, the Central Organisation Department and the Chinese Development Foundation, in the senior workshops for Chinese state-owned enterprises chiefs. During these, participants pay visits to Denmark where they are able to share their successful experiences with Maersk.
¡¡¡¡It was thus evaluated that Maersk owes its successful expansion to its prompt understanding of local culture, as well as the distinctive localisation in terms of business operation.
¡¡¡¡Maersk is making rapid progress in China. A number of important infrastructure construction projects have even very clearly listed Maersk as a "priority" cooperative partner, whether as an investment or simply a member enterprise to be included. This has mirrored the Matthew Effect in the shipping and logistics sector, and perhaps may involve some further strategic thinking.