KEY POINTS:
WELLINGTON - Eivind Kolding manages a business with 500 container ships so he was making quite a statement when he said margins more or less disappeared in 2006.
The chief executive of AP Moller Maersk's container shipping business was in Australia for the first time last week to meet staff, so local journalists got a rare glimpse at the leadership of the biggest container shipping business in the world.
Mr Kolding wasn't wanting to wade into the complexities of the New Zealand transport scene that challenge the understanding of even those who work in it -- Maersk's NZ boss Tony Gibson is waiting to see the masterplan of the proposed Port of Tauranga and Ports of Auckland merger to understand the strategy.
And he didn't reinforce Australian journalists' concerns about their ports' lack of urgency in addressing depth and capacity issues.
Fonterra very much rates on his radar screen though, because the New Zealand dairy co-operative is one of Maersk's top 10 customers, an exporter rating alongside huge importers like US retailer Walmart.
Denmark's AP Moller Maersk Group is accused of being secretive but Mr Kolding politely answered all of the questions put to him.
Maersk had negative press after it took over P&O Nedlloyd last year to give it currently about an 18 per cent share of the global container shipping market, about double the next player Mediterranean Shipping Company (MSC) on 8-9 per cent.
MSC, owned by an Italian family, is a relatively new player but Mr Kolding doesn't expect there to be any new entrants on the container shipping scene. It just takes too much capital.
Maersk was not planning any acquisitions at the moment, though Mr Kolding sees ongoing consolidation in the industry. There was a lot of consolidation in 2000 and again last year.
"Further consolidation will take place," he said.
He was asked about the rise of financial investors, like fund managers and private equity firms, particularly in the port terminal area where Maersk operates APM Terminals.
But the attitude of the shipping company that began in 1904 is that if Maersk sticks to his motto of taking constant care in everything it does it will survive any change in its operating environment.
Even though Maersk prides itself on taking a long term view, Mr Kolding acknowledged that the shipping industry has had a difficult year in 2006.
Freight rates went down and fuel prices went up, so margins almost disappeared.
He doesn't think margins will get all the way back in 2007. It will be better than 2006 but not the heights of 2005.
Despite the fluctuations of difficult-to-predict freight rates the group is committed to shipping.
"We're happy with the container business," he said.
That's because although container shipping is a low margin business demand for it generally outpaces overall economic growth and Mr Kolding doesn't see any reason for that to change.
He doesn't think the food miles issue, where lobbyists have complained at the waste to the environment from shipping food like kiwifruit from New Zealand to Europe when it could be grown locally, is a major concern.
He doesn't see any reason why the growth in container shipping in the last 10 years shouldn't happen in the next 10 years.
Maersk stoked the debate with the launch of Emma Maersk, the biggest container ship ever built. She was dubbed a giant santa sledge when docking in Britain laden with goods for Christmas, including New Zealand lamb.
The sight of 10 cranes working one ship at some ports Emma Maersk calls at is a rare one. The challenge will be to keep the vessel full to get the economies of scale.
Maersk analyses changing trading patterns and tries to come up with the optimum solution. It feels that it is obliged to do that to be effective for its customers.
Several times in discussions about industry trends, Mr Kolding said quietly and firmly that dealing with them "is what we do".
Maersk wasn't so popular with customers when it had system problems during the P&O integration. This was described as unusual and improving.
There is much that is unusual about AP Moller Maersk Group. It operates like a family firm even though it is large and listed.
Half of its shares are held in a foundation which gives it a stable ownership structure.
The 93-year-old Maersk McKinney Moller, son of founder AP Moller, still calls into the office frequently. He recently gave Denmark a new opera house costing US$442 million ($666 million).
Pictures of father and son grace the offices in Sydney.
- NZPA
