IB SOLVER'S CUP - PRELIMINARY ROUND

ASIA GROUP

MAERSK GROUP: SAILING IN A MARKET DOWNTURN

ZHIGANG TAO
PENNY-FRANCES LAU

Summary

Humans have always had a close relationship with the aquatic environment, including
the very early use of the sea to harvest food and communicate. Today, the sea is an important
component of the transportation system, with a large volume of goods and passengers.

Shipping by ship over time is facing more and more difficulties and challenges related
to raw material supply, market demand, emissions affecting the environment, and competitive
pressures among commercial shipping lines. commercial.

Maersk Group, which has experienced its peak in the maritime industry, has also
suffered a lot from this market. The predicament spawned many controversial solutions, some
to the Group's advantage, and also bad situations.

Specifically, Maersk Group faced the following problems:

- Falling oil prices affect the company's profits

- Rival companies are also racing to use large-capacity containers

- Demand is decreasing while more ships are produced, the cost of handling old ships and
operating new ships faces many obstacles.

- Pressure from the low-cost advantage of Chinese companies.

The proposed treatment solutions:

- Ship liners also tried to bring down per container unit cost by replacing smaller and older
vessels with newer, bigger ones.

- Some liners chose to reduce capacity by leaving vessels idle, an industry practice called
“laying up ships.” Shipping companies briefly practiced idling right after the financial
crisis, when they laid up about 11% of the world’s fleet.

ASIA GROUP - Case Maersk - DOV

1
 - It was difficult to sell an operational vessel during times of overcapacity, and idling was
a reversible tactic that temporarily withdrew capacity from the market in hopes of
deploying those ships again when freight rates went up.

And a lot of solutions to solve the problems.

Maersk Group, facing difficulties, launched the world’s biggest container ship, the
Triple-E, which, at 400 meters long, could hold 18,000 20-foot containers and had lower fuel
use. Maersk cut 1/5 of its staff and aimed to reduce USD250m in administrative costs, with
further plans to reduce its workforce. Skou adopted a “cost leadership” strategy to stay
competitive by being cost-efficient. He exercised operational improvements, organizational
changes, layoffs, and cost reductions in sales and administrative expenses. Maersk Oil cut
operating expenses and staff. Layoffs, a salary freeze, travel expense reduction, and
outsourcing of administrative functions were some of the measures it employed. While
already reducing costs by more than 30% since 2014, it aimed to further cut operating
expenses by 20% by the end of 2016.

It brought advantages initially but later caused many obstacles. This cannot be a long-
term solution if Maersk aspires to become a leader in the maritime shipping market.

Therefore, our team has outlined specific difficulties that Maersk Group may face and
some short-term and long-term solutions for the company to restore its leading position and
gain a lasting advantage.

ASIA GROUP - Case Maersk - DOV

2
Question 1: Why reliability is a core element in setting out to differentiate itself in the
shipping industry? What should Maersk do to address these fundamental challenges in
this industry?

Why reliability is a core element in setting out to differentiate itself in the shipping
industry?

Notteboom (2004) suggests that liner shipping services are differentiated through
characteristics such as transit time, reliability, and frequency of service. According to Drewry
Shipping Consultants, container service reliability had only averaged 50–60 percent from
2005 to 2010 (Maritime Activity Reports, Inc. 2011). Together with an unreliable schedule, a
standard weekly sailing frequency also makes it difficult for shippers to practice more
efficient just-in-time production/distribution (Lam and Van de Voorde 2011). Schedule
reliability is a fundamental requirement of global shippers (Lam and Van de Voorde 2011).
The analysis presented earlier shows that a reliable liner shipping service substantially
reduces a shipper's safety stock and pipeline stock. In fact, schedule reliability plays a key
part in influencing total logistics cost regardless of transport modes (Allen, Mahmoud, and
McNeil 1985; Tyworth and Zeng 1998). Further improvements are more challenging because
schedule unreliability has been mainly caused by external factors such as port/terminal
congestion and port/terminal productivity below expectations (Notteboom 2006).

Due to the low-cost trend, the transportation demand for container shipping is getting
increasing recently. The system of container transportation is structured under time-tight
schedules. Schedule reliability might be the reference for shippers when planning their supply
chains with realistic expectations of delivery time and selecting liner carriers. Thus, delays
might not only decrease the reliability of the liner service but also increase logistics costs to
the customer, such as additional inventory costs or additional production costs (e.g., a
production stop due to late delivery of materials).

Schedule reliability is important for companies when addressing cargo activities.

Delays will decrease the reliability of the liner service, cause a knock-on effect on the
hinterland supply chain, and also add logistics costs to the customers. Thus, schedule
reliability is important for each shipping line while handling cargo by sea. Service quality of
schedule reliability might have a bigger influence on freight rate negotiations between
carriers and shippers; meanwhile, it also will influence the performance of shipping lines.

ASIA GROUP - Case Maersk - DOV

3
 Another core element of reliability that can set out to differentiate itself in the shipping
industry is human reliability. Some research shows that 80% of marine casualties are caused
by human error (Fotland, 2004; Hanzu-Pazara et al., 2008; Corovic and Djurovic, 2013; Ung,
2015; Akyuz and Celik, 2015a). Or according to the American Bureau of Shipping (ABS)
accident investigation report, human errors initiate around 50% of maritime accidents (ABS,
2003). For example, on May 13, 2013, while waiting to berth, the engine of a foreign ship
exploded at Lanshan Port of Rizhao City, China, the reason is that two seamen forgot to close
the heating valve after exchanging the bunker oil with light diesel oil. Moreover, nowadays
with the advanced technique, the man-machine interface is much more popular, which
increases the concerns about the reliability of marine and offshore operations (Tzannatos,
2002). Careful estimation of human reliability can improve safety management and prevent
accidents.

Some of the reasons for human errors are lack of training and experience, poor
communication, inadequate system monitoring, failure to learn from previous accidents,
human fatigue, stress, or weather conditions, workplace temperature, ship motion, noise, and
vibration. (Hetherington et al., 2006; Li and Ng, 2002; Sillitoe et al., 2010; Stevens and
Parsons, 2002; Xhelilaj and Lapa, 2010). By interviewing the captains in the tanker shipping
company, contact information such as contract duration and working time also have an
extreme effect on human reliability on-board. Therefore, it is considered an essential strategy
to carry out human reliability evaluation, thereby leading to creating differentiation with
other companies in this industry.

Parasuraman et al. (1988) summarised five dimensions of SERVQUAL model showing

basic criteria and standards of the customers for evaluating the service quality, especially is a
reliable factor. Reliability is defined as the ability to do and provide the promised services in
an appropriate, accurate and reliable manner; doing what is expected by the customer and this
means that the customer is provided with services on due time and in the way he/she was
promised and with no fault. 

Referring to Zeithaml et al. (1996), the dimensions of responsiveness, assurance and

empathy were placed after reliability. They concluded that regardless of the kind of services
provided to the customers, reliability is considered as the most significant aspect in providing
customers with the services. Reliability also is the main predictors of customer satisfaction
(Kum Fai, 2015). Considering the importance of reliability in the logistics of companies, it

ASIA GROUP - Case Maersk - DOV

4
makes sense that basic operations have a significant effect on the loyalty of freight
forwarders. (Gökcay et al., 2019)

According to the result of Kum Fai study (2015), we can see the necessity of reliability
in the shipping industry. First, reliable transportation service results in substantial cost
savings for shippers, as it reduces supply uncertainty and safety stocks. Less variability in
supply replenishment also allows shippers to streamline their production, which results in
better utilisation of assets and resources. Second, faster transportation service also reduces in-
transit inventories in the transportation chain. Attributing to the time-sensitivity and value of
the commodities that are shipped by liners, substantial cost-savings for the shippers can be
realised from improving both service quality dimensions. 

It can be implied that differentiation based on reliability service attribute is a more

effective strategy as compared to applying cost leadership. High reliability will improve the
company's reputation, increase the intention to use the service that the company provides,
enhance competitive advantages, thereby increasing market share in shipping industry.
Reliability is a core element that help setting out to differentiate itself in the shipping
industry.

What should Maersk do to address these fundamental challenges in this industry?

Detection and diagnosis of marine engines faults are extremely important functions for
the optimized voyage of any sea-going vessel, as well as the safe conduct of navigation. Early
detection of these faults is a prerequisite for reliability: incidents of engine breakdowns can
be avoided since the timely resolving of these faults can ensure the non-interrupted tempo of
the sail.

Developers of marine propulsion engines are always paying special attention to both
the issues of efficiency and reliability. On the positive side for all those involved in engine
design and development, recent advancements in electronics and computers have created the
opportunity to significantly improve the performance of their systems. Modern information
technology (IT) applications can facilitate detection and fault diagnosis techniques; artificial
intelligence, machine learning, and fuzzy logic are just a few of the concepts that were
envisioned in the recent past to offer optimal utilization of the ship’s engine and under all
operating conditions (Lan et al. 1996; Xiros and Kyrtatos 2000). Minimizing the
environmental impact of shipping is also another important issue that can be addressed via IT
applications. For example, machine learning algorithms have already been researched to

ASIA GROUP - Case Maersk - DOV

5
facilitate the monitoring-reporting-verification (MRV) function of exhaust gas emissions,
focusing on early identification and correction of the arising faults (Nikitakos et al. 2018).

a. Examining methods of data mining and establishing the capacities necessary for
machine learning algorithms to solve their allocated problems.

b. Evaluate a series of measurements (with pressure and temperature inside the engine’s
cylinders standing out) associated with engine failure diagnostic purposes, which clearly
demonstrate that the proposed method can then be used in the field (on-board seagoing
vessels).

c. Support the notion that resolving engine fault diagnosis can be easily achieved by
marine engineers, especially in relation to the world’s most significant engine category (the
two-stroke low-speed marine diesel engine).

To achieve certain human reliability in this industry, it is important to focus on the

following factors:

 Leadership

Top management in shipping companies is experienced personnel. They should know how to
inspire their staff to make the right decision and ensure safety and immediate response to
unexpected events. The official communication channel has to be built carefully in order to
prevent decisions that may lead to failure.

 Attitude

Roles and responsibilities are clearly defined, and staff is always trained properly. Each
training session is not just about industry regulations and skill requirements but also about
experience and errors in the past. This can help them prepare good solutions to improvise and
tackle future accidents.

 Culture

A ‘No Blame culture’ should cover the reporting and spread knowledge and solutions
for preventing incidents from happening again. The idea of openly reporting every incident
can help the organization focus on such problems, in order to prevent similar issues in the
future. The culture of an organization also should focus on issues related to unacceptable or
unsafe behavior.

ASIA GROUP - Case Maersk - DOV

6
 Moreover, there are other studies tested and proven with effective models to reduce
human error in the shipping industry. Some of them are: Human error assessment and
reduction technique (HEART) is the tool that can measure human error probability during the
execution of a given task. HEART theory is based on some elements like any time a task is
done and the probability of a loss is influenced by one or more error-producing conditions
(EPCs) / performance shaping factors (PSF). Or Shipboard Operation Human Reliability
Analysis (SOHRA), a modified version of the HEART, measures human error and predicts
human reliability in shipping operations. Or a modified CREAM (Cognitive reliability and
error analysis method) proposed by Yang et al. (2013) to facilitate human reliability in the
marine engineering sector, thereby providing safety engineers with a transparent tool.

Parasuraman et al. (1988) summarised five dimensions of the SERVQUAL model

showing basic criteria and standards of the customers for evaluating the service quality,
especially is a reliable factor. Reliability is defined as the ability to do and provide the
promised services in an appropriate, accurate and reliable manner; doing what is expected by
the customer means that the customer is provided with services on due time and in the way
he/she was promised and with no-fault.

Referring to Zeithaml et al. (1996), the dimensions of responsiveness, assurance, and

empathy were placed after reliability. They concluded that regardless of the kind of services
provided to the customers, reliability is considered as the most significant aspect in providing
customers with the services. Reliability also is the main predictor of customer satisfaction
(Kum Fai, 2015). Considering the importance of reliability in the logistics of companies, it
makes sense that basic operations have a significant effect on the loyalty of freight
forwarders. (Gökcay et al., 2019).

According to the result of Kum Fai's study (2015), we can see the necessity of
reliability in the shipping industry. First, reliable transportation service results in substantial
cost savings for shippers, as it reduces supply uncertainty and safety stocks. Less variability
in supply replenishment also allows shippers to streamline their production, which results in
better utilization of assets and resources. Second, faster transportation service also reduces in-
transit inventories in the transportation chain. Attributing to the time-sensitivity and value of
the commodities that are shipped by liners, substantial cost savings for the shippers can be
realized by improving both service quality dimensions.

ASIA GROUP - Case Maersk - DOV

7
 It can be implied that differentiation based on reliability service attributes is a more
effective strategy as compared to applying cost leadership. High reliability will improve the
company's reputation, increase the intention to use the service that the company provides,
enhance competitive advantages, thereby increasing market share in the shipping industry.
Reliability is a core element that helps set out to differentiate itself in the shipping industry.

Question 2: “Maersk Line had the ambition of becoming the sustainability leader in an
industry that was often criticized for environmental impact, most notably the
greenhouse gas emissions (GHG) from its heavy fuel use... The company had
successfully launched several initiatives, which had results in emissions reductions and
significant fuel savings (eg. Triple-E). These initiatives had required time and
investment”. However, with currently grim market condition, whether sustainability
can help Maersk has competitive advantage in this industry.

In the currently grim market condition, if Maersk does these initiatives, it means that
Maersk has to face many problems.

The first one is financial performance. Investing in Triple-E vessels can cost a lot of
amounts to invest, and in the short term, it can be a financial burden and lead to breaking a
strong financial structure. Besides, investing too much in sustainability can affect the budgets
of other Maersk projects.

The second one is overcapacity. Investing in Triple-E vessels can help Maersk increase
capacity, but in today's austere market, supply is outstripping demand, this can lead to
inefficient operation, costly administration, and operation.

The third one is the emergence of Chinese shipping companies. At a time with very
intense competition, many Chinese shipping companies had widespread state support, both
financially and policy. As a result, these companies might offer a lower price in order to take
Maersk's market share. Investing in sustainability raises expenses, which leads to higher
short-term service prices. It can harm to the cost leadership strategy which Maersk followed
before. It will be difficult to compete with companies from China because they offer a lower
rate.

Considering that more than 90% of the world’s traded goods travel by sea, it obviously
has an environmental impact. Even though maritime freight is not as polluting as land or air
transport, it also causes greenhouse gas emissions, as well as sound and oil pollution.

ASIA GROUP - Case Maersk - DOV

8
Besides, the shipping industry is still using highly polluting bunker fuels like heavy fuel oil
(HFO) for economic reasons. The danger it poses is real.

The port industry, along with any other industrial activity, has a significant effect on
global gas emissions and climate change. During the last few years, there has been growing
societal pressure on environmental performance. Naturally, this has sparked debate in the port
and maritime industry. The industry's main stakeholders are currently rethinking and
rebuilding their corporate strategies. More importantly, they are beginning to understand that
by adopting sustainability as a core pillar they are adapting a competitive advantage that will
be instrumental for the construction of long-term sustainable growth.

When Maersk puts these initiatives into action, it will be able to gain various benefits.
Specifically, Triple-E ships had up to 59% lower unit costs (fuel efficiency) and 50% lower
CO2 permission per container than the industry average.

By that, it is highly recommended that businesses, particularly port operators, establish

ecologically friendly systems. This not only increases reputation, which is an intangible
benefit, but also efficiency, which is easily measurable through the improvement of operating
results.

In short term, Maersk faces a lot of problems such as financial performance, the
emergence of Chinese companies, gloomy market, and overcapacity. Following a sustainable
plan will take a lot of effort and money, especially given Maersk's initiatives are
implemented. However, in the long-term developments, when environmental regulations are
tightened, developing in a sustainable manner will help Maersk get a competitive advantage
that few other companies can get. Maersk can gain a competitive edge in this area as a first-
mover advantage in sustainability, in addition to its reputation and service quality. In order to
follow a sustainable strategy, Maersk should divide it into different tiny phases for gradual
implementation. This provides Maersk and the market time to adapt to the change. There
may be numerous flaws in the early stages of implementation, but things will become easier
in the long term.

ASIA GROUP - Case Maersk - DOV

9
Question 3:

a) He wanted to expand the possibilities of growth instead of just focusing on cost.

Operation-wise, he could continue with the company’s cost leadership approach and
intensify current efforts on optimizing resources. But going forward, what would be the
best strategy for Maersk Group?

Table 1. Annual profit and loss (in brackets) figures.

Oil prices that began falling in late 2014 severely hampered profitability at Maersk Oil
and Maersk Drilling. In the industry’s better days when oil prices were hovering above
USD100 per barrel, Maersk Oil was able to deliver one-third of the Group’s profit, but since
oil prices dropped by half in 2015, it had been reporting heavy losses. As exploration and
drilling costs were fixed and incurred upfront, lower returns from oil also extended the time
needed to recover the costs in developing a project, which relied on cash flow from selling
oil. Ensuring a steady volume in entitlement production and keeping costs low was thus
crucial in times of low oil prices. Lower oil prices also added pressure to oil field owners,
including many oil-producing countries, to cut back on production volume. They raised the

ASIA GROUP - Case Maersk - DOV

10
uncertainty in securing future contracts, as owners tended to postpone or suspend projects.
Other subsidiaries also suffered. Units that provided support to the oil business were affected
by the lower demand and decreased spending on oil rigs, with some projects deferred or even
canceled. Units that provided shipping support were affected by lower shipping volume
demand and throughput.

In 2015, Skou cut 1/5 of its staff, planned to reduce USD250m in administrative costs,
and used bigger and more efficient ships, slow steaming, thereby focusing resources on
exercised operational improvements, organizational changes, layoffs, and cost reductions in
sales and administrative expenses. With that strategy, Maersk Group will become a cost
leader and gain competitiveness in the shipping market. Although cost reduction is a positive
step towards helping the company overcome current difficulties, in the long term it can cause
negative vibes toward the company and amongst the employees.

In addition to adjusting its capacity at sea, coordinating its landside operations with
logistics partners and customers was also important in having an efficient operation. For
example, with the adoption of its Triple-E vessels that required larger berths and taller cranes
to unload containers, it worked with dock operators and terminals to ensure containers were
moved quickly. With fewer ports equipped to host its biggest vessels, Maersk Line optimized
service by readjusting feeder services to smaller ports.

Collecting and analyzing shipping data also became pivotal in improving operational
efficiency. As part of its campaign to digitize and automate procedures, Maersk Line
equipped its vessels with software that allowed captains to monitor loading conditions on
board and helped determine the safest route based on sea conditions. This technology
adoption ensured reliability and timeliness of service.

Other subsidiaries had also been implementing cost cuts to stay competitive. Maersk
Oil responded by cutting operating expenses and staff. Layoffs, a salary freeze, travel
expense reduction, and outsourcing of administrative functions were some of the measures it
employed. While already reducing costs by more than 30% since 2014, it aimed to further cut
operating expenses by 20% by the end of 2016. Despite the need to cut costs, Maersk
Group’s financials were still relatively robust, and it had USD12bn in cash reserves criticized
for environmental impact, most notably the greenhouse gas emissions (GHG) from its heavy
fuel use.

ASIA GROUP - Case Maersk - DOV

11
 The reduction in personnel and negative impact on the environment in the past helped
the development of Maersk Group effectively in the early stages, but in the long run, cutting
costs in this way caused a lot of controversies. It leads to employee loyalty and performance
that will decrease over time. Customers do not prioritize use because of bad images related to
the environment of this shipping company.

Cost reduction is a double-edged sword. In the case that Maersk Group focuses too
much on cost reduction, the quality of the service may be sacrificed, thereby reducing the
brand value. For example, Maersk Group may use lower quality engines or fuel for their
ships at lower cost, so the safety of their ships will decrease. Moreover, whether one
enterprise can develop or not also depend on the quality and loyalty of its employees. If
Maersk Group continued to cut staff, one question needed to be answered was that whether
Maersk Group was a good working environment or not.

It is undeniable that when revenue falls, it is natural to think about cutting costs, but it
is better to think about the wrong message coming to employees and customers. The top-
performing companies rarely compete on price or lowest cost. When we concentrate on how
much value we can bring, employees' and customers' loyalty will help us to reach new
heights (Ian, 2015). In the long run, Maersk Group should apply the strategy related to
gaining more value, expanding the possibilities of growth such as service quality, new market
entry,... Overcoming the early stage when not cutting costs, expanding the business strategy
can help Maersk Group to attract new customers, create economies of scale, spread the cost
of doing business across more markets or customers, and lowers the cost of doing business,
and increase its position in the shipping industry. Therefore, it is time for Maersk Group to
have a plan to build a long-term plan to expand their business and sustainability, not just
focus on cost reduction.

b) How could Skou retain the Group’s leading position in deteriorating market
conditions? What could he do to prepare the company for the years ahead given the
mixed signals in global trade and economy?

Maersk Group, which has experienced its peak in the maritime industry, has also
suffered a lot from this market. The predicament spawned many controversial solutions, some
to the Group's advantage, and also bad situations.

Specifically, Maersk Group faced the following problems:

ASIA GROUP - Case Maersk - DOV

12
 - Falling oil prices affect the company's profits

- Rival companies are also racing to use large-capacity containers

- Demand is decreasing while more ships are produced, the cost of handling old ships and
operating new ships faces many obstacles.

- Pressure from the low-cost advantage of Chinese companies.

The proposed treatment solutions:

- Ship liners also tried to bring down per container unit cost by replacing smaller and older
vessels with newer, bigger ones. 

- Some liners chose to reduce capacity by leaving vessels idle, an industry practice called
“laying up ships.” Shipping companies briefly practiced idling right after the financial crisis,
when they laid up about 11% of the world’s fleet.

- It was difficult to sell an operational vessel during times of overcapacity, and idling was
a reversible tactic that temporarily withdrew capacity from the market in hopes of deploying
those ships again when freight rates went up. 

And a lot of solutions to solve the problems.

 Form Partnership and Customer Relationship Management

Establishing a cooperation relationship, good interaction with customers could help

businesses survive in the fiercely competitive market and not worry about over-tonnage in the
off-season (Basak and Gajbhiye, 2018; Khosravi et al., 2018). Boerman Willemsen, and Van
Der Aa (2017) proposed CRM as a tactic that an enterprise understood and affected customer
behaviors through meaningful communications, preventing existing customers from leaving.
In the case study, it can be seen that the most common partnerships were alliances in which
members jointly operated vessels and provided services for each other’s customers. That can
be a good way to enhance the quality of service and gain customers’ experience.

ASIA GROUP - Case Maersk - DOV

13
 Table 2. Market consolidation and alliances by 2015.

Or Skou has been allowed to equip all of its 270,000 reefer containers with
communication devices that made real-time tracking possible via satellite and mobile
networks for sharing the right data with customers to improve service, which is considered as
a good method to build the relationship with the current customers. Therefore, in the future,
Maersk Group can expect word-of-mouth marketing from these customers. 

 Continue to increase Popularity through sustainability

Maersk Line had the ambition of becoming the sustainability leader in an industry,
especially reducing most notably the greenhouse gas emissions (GHG) from its heavy fuel
use. As demonstrated in question number 2, Maersk Group should continue to do this, so it
can help them gain more popularity and consolidate their position. The development of
Maersk Group will link firmly to social responsibility and environmental friendliness. 

Moreover, in the long term, Maersk Group needs to understand the following market
characteristics:

- Reduction of prices is not a good solution for the increase of the market share since the
competition (Trieste, Koper) will do the same thing and this could only lead to a lower
income of both the port and its associated industries.

ASIA GROUP - Case Maersk - DOV

14
- It is necessary to become aware of own strengths and create such market segments
(market niches) where these can be successfully implemented.
- The available resources should be used for the realization of a small number of chosen
cost-effective projects and business activities.

When managing a small-market share company, it is necessary to pay undivided

attention to the business strategy and its implementation. A company (ports) with a large
market share has the capacity of directing its superior resources to the markets of the
company with a small market share in order to gain control of it. A segmented market is one
of the most effective strategies to stand up against such an expanding business operation. It
is, therefore, necessary to create such market segments where the strengths of a small share
company can come into play. When creating the marketing niches, the essential point is the
ability to compete, i.e. high quality of products and services. No valid definition of any of the
competitive advantages can be made without a precise and objective analysis of:

- The shipping lines strengths and weaknesses

- The strengths and weaknesses of the competitive companies
- The key factors of the market success
- Changes taking place in the environment.

The strengths of the port, its minimized weaknesses respectively, should be made the
basis of every successful strategy. Their planning requires a reliable analysis of the economic,
technological, demographic /social/ cultural, political, and ecological environment, which are
subject to continual changes.

Goss (1987) wrote that we have 3 ways to make money in shipping: 1) buy cheap, sell
high; 2) do better than what others do; 3) make technical advances with economic goals. First
depends on finance; Furthermore, the value of the ship must increase faster than the rate of
interest. For the latter, a new ship design is required; and cost-effective techniques; the
reasonable combination of short-term and long-term charters; future market estimates;
minimum crew; right timing between dry builds, and a more efficient propeller design. For
the third, economies of scale; minimum port time; A long-term charter is required. Then learn
to take risks. 

ASIA GROUP - Case Maersk - DOV

15
 Marine companies (i.e. shipping, port, and shipbuilders) must check that charterers take
their services seriously. Furthermore, safety and security must be provided, to a certain
acceptable level, even though “quality” is not paid for by the charter. 

Humans have always had a close relationship with the aquatic environment, including
the very early use of the sea to harvest food and communicate. Today, the sea is an important
component of the transportation system, with a large volume of goods and passengers.

Shipping by ship over time is facing more and more difficulties and challenges related
to raw material supply, market demand, emissions affecting the environment, and competitive
pressures among commercial shipping lines. commercial.

ASIA GROUP - Case Maersk - DOV

16
References:

Parasuraman, et al,. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions
of service quality.

Yuen, K. F., (2015). Service quality and customer satisfaction in liner shipping. International
Journal of Quality and Service Sciences, 7, 170–183.

Abraham Z., Jasmine S. (2014). Impacts of Schedule Reliability and Sailing Frequency on the Liner
Shipping and Port Industry: A Study of Daily Maersk. Transportation Journal 53, 235–253.

Islam, R., Abbassi, R., Garaniya, V., & Khan, F. (2017). Development of a human reliability
assessment technique for the maintenance procedures of marine and offshore operations. Journal of
Loss Prevention in the Process Industries, 50, 416–428.

Review and analysis of accident data bases, Technical Report. American Bureau of Shipping,
Houston, USA, pp. 1-8.

Tzannatos, E., (2002). GMDSS operability: The operator-equipment interface. Journal of Navigation
55, 75-82.

Zhou, Q., et al,. (2018). A fuzzy and Bayesian network CREAM model for human reliability analysis –
The case of tanker shipping. Safety Science, 105, 149–157.

Enna H. (2019). Service characteristics and customer satisfaction in the container liner shipping
industry. The Asian Journal of Shipping and Logistics 35, 24-29.

Rabiul I. et al,. (2017). Development of a human reliability assessment technique for the maintenance
procedures of marine and offshore operations. Journal of Loss Prevention in the Process Industries
50, 416-428.

Balci, G., Caliskan, A., & Yuen, K. F. (2019). Relational bonding strategies, customer satisfaction,
and loyalty in the container shipping market. International Journal of Physical Distribution &
Logistics Management, 49, 816–838.

Soner, O., & Celik, M. (2020). A human reliability assessment through enclosed space entry
operation onboard ships. Proceedings of the Institution of Mechanical Engineers, Part M: Journal of
Engineering for the Maritime Environment, 235, 410–420.

Renyou Z. et al,. (2020). A modified human reliability analysis method for the estimation of human
error probability in the offloading operations at oil terminals. Process safety progress 40, 84-90.

Basak, B.B. and Gajbhiye, N.A., (2018). Herbage yield and bioactive principle of senna as influenced
by micronutrient application in soil. Journal of Environmental Biology, 39(1), 43-49.

ASIA GROUP - Case Maersk - DOV

17
Khosravi, A.; Koury, R.N.N.; Machado, L., and Pabon, J.J.G., (2018). Prediction of hourly solar
radiation in abu musa island using machine learning algorithms. Journal of Cleaner Production,
176, 63-75.

Boerman, S.C.; Willemsen, L.M., and Van Der Aa, E.P., (2017). “This post is sponsored”: Effects of
sponsorship disclosure on persuasion knowledge and electronic word of mouth in the context of
facebook. Journal of Interactive Marketing, 38, 82-92.

V. MezAk, A. Perić, A. Jugović (2006). The long-term port development strategy planing elements..
Pomorstvo, 9-22.

Alexandros M. G. (2017). Strategies in “Shipping Business Management”. Modern Economy Vol.8.

Eulerhermes. (2021). What are the advantages and disadvantages of expanding your business?

https://www.eulerhermes.com/en_global/news-insights/business-tips-and-trade-advice/advantages-
and-disadvantages-of-expanding-a-business.html

Forbes. (2015). The Good, The Bad, And The Ugly Of Cost Cutting, 2015.
https://www.forbes.com/sites/ianaltman/2015/03/17/the-good-the-bad-and-the-ugly-of-cost-cutting/?
sh=4308814b377b

ASIA GROUP - Case Maersk - DOV

18