MARTIN BENCHER
A P MOLLER Group's acquisition of MARTIN BENCHER set to trigger pricing challenges for many project forwarders globally
Sanjib Gupta Roy, Logistics, Shipping, Project Cargo, SCM and Visiting Faculty

The process of forward integration by Major Shipping lines is slowly affecting many small and medium Forwarders. Many have even stopped quoting Container Freight rates to Forwarders and a few are quoting relatively high rates. This policy of direct Shipper Consignee sales will definitely trigger a pricing war.

As regards pricing challenges, the recent acquisition by A P MOLLER Group of Aarhus-based Project Logistics Service provider MARTIN BENCHER (Scandinavia) A/S, will trigger a huge pricing challenge for many Project Forwarders globally.

Maersk Shipping Line (part of the A P MOLLER group) with their own container ships and bulk carriers (if not exclusively chartered) will play a big role in loading OOG and heavy loads in large and Special Project Logistics (SPL) and will give much lower bids and multiple value-added services in many ports globally, to get high priced Project Cargo, and to add to their policy of controlling end-to-end supply chains.

The recent takeover of MARTIN BENCHER was announced by Karsten Kildahl, Regional MD, Maersk, after signing the agreement with Peter Thorsoe Jensen and the board of MARTIN BENCHER. However, Maersk must also look at the knowledge and expertise to run and execute SPL and must retain the hands-on expert team of MARTIN BENCHER to continue seamless operations. Their understanding of the entire gamut of operations and cooperation with the many local partners needs to be implemented. Project Logistics is a combination of many partners, service providers, specialized equipment like multi axles, submersibles, heavy lift cranes (both shore and off shore), specialized lashing and dunnage, surveyors, route surveyors, etc.

MARTIN BENCHER

Maersk has recently completed the acquisition of LF Logistics from Li & Fung. To add a point on Maersk ‘s global footprint, their India and South Asia management has forayed into Inland Water Transportation with their own barge operating for trade between India and Bangladesh.

My strong speculation is that they may soon get into multi-modal mode and start acquiring companies to get into road and small parcels too. Recently, competitor shipping line - the French CMA-CGM, started Air Freight operations as a value-addition and to cater to the growing demand of air cargo.

The scope of pricing in Project Shipping is mostly door to door, that is, from manufacturer to consignee site or plant. The major chunk (70 to 80%) is by Sea Freight and the balance by Air. Hence, sea freight is going to be a major pricing tool for Maersk to bid and win against many other Project Forwarders. Here again, they will use (wherever possible) their own equipment. However, this will also mean that they will have to collaborate strongly with other bulk carriers and optimize Space, Time and Reach.

Project pricing consists of multiple areas and Maersk will hold many advantages in view of their many offices and agents in almost every major port and city globally; infrastructure in CFS and port operations; and partners on shore in their regular container/bulk operations who will chip in with their equipment etc.

There will be many pricing challenges that the team will have to overcome (especially with road haul of OOG and heavy weights) in countries like the Indian sub-continent, CIS, and Africa, where there are no proper regulatory bodies, and getting road permits, police permissions, interstate taxations etc. is a challenge.

In India, we are seeing a rush to build highways and expressways to cater to passenger traffic and limited truck operations. The toll gates are not kept flexible on one end to move oversize or odd shaped loads. The Indian think-tank and governance is pushing to create industrialization zones but our highways are not built to cater and be project and logistics friendly.

Let’s address some of the important factors of project pricing which will help non-industry readers to understand the pricing areas benefitting Maersk Logisitcs. As written above, Pricing is mainly from Manufacturer to Consignee Site, hence the following factors:

A. Onsite Loading: Here, equipment like Flat Racks, Platforms, Open Tops, and Multi Axles are sent. At the very start is the cost of route survey from Factory to Port of CFS. Normally, these factories would have supplied the machines earlier, so may eliminate this with prior experience and route knowledge.

B. Cost of Transporting: Cost of lashing wooden dunnage etc.

Cost of loading with cranes (some suppliers will provide their own cranes).

Cost of moving back to Load Port of CFS. Incase loose cargo is sent to CFS, then the above charges like lashing dunnage and Special Equipment movement will apply (sometimes, equipment is available at the CFS). Labour Crane, Storage etc are CFS handling charges. CFS to also cover movement to port and under hook for bulk loading.

The advantages that Maersk has are many: They have their own facility near some load ports and have agreements with many other private CFS where the present container operations are on. They also hold the advantage with many truckers and will get special pricing. They can enjoy up to 20-30 % cost advantage over their competitors. In fact, even a 10% difference can mean a lot.

C. Port Operations, Terminal Handling, Wharfage etc: Here, there may not be any advantage unless Maersk starts their own terminal operations (they may be managing in some places). Port charges will be the same for all bidders.

D. In case of Air cargo A & B charges will apply, and C will change to Airport Cargo hold. Sometimes B may be eliminated if moved directly to the nearest Airport where Freighters are available.

E. Air freight / Ocean Freight: Unlike CMA, Maersk is yet to place their own aircraft and have a strong charter team in place. However, their main role will be in Ocean Freight. The advantages that Maersk holds here is that they can outbid even the strongest contender in pricing. The advantages in loading Flats, Open Tops, and slot losses thereof will definitely put them in the driving seat as regards the pricing. Only in places where Submersibles Bulk charters etc are required, competition will have an even playing field.

F. Dis Port / Airport terminal charges, wharfage, apron charges, labour etc will be same for all.

G. The role now gets reversed from load port to deliveries.

H. Again, route surveys etc to be undertaken. The cost depends on the Dis Port agents and can vary. Maersk will use their offices, wherever available. Project Logistics Networks help to identify good partners and work in tandem with profit sharing.

I. Again here, transportation is direct to consignee site (mostly) and CFS is not needed. However, Customs costs may get increased as many consignees at the time of opening their Letter of Credit and completion of purchase of the plant do not consult any Project Forwarder. Hence, they land up showing one port as dis port, whereas to expedite and sometimes even reduce costs, shipments can enter from multiple ports. To cite an example: at Mumbai, all the containers move from JNPT and all bulk cargo from the Mumbai port. The Customs are different in both the locations.

J. Maersk holds an advantage here in land transportation with their existing partners and their only need is for multi-axles that they may get same bids.

Overall, we see that this will trigger a major pricing war and many small project forwarders will find it difficult to outbid and will need to reinvent their scope of operations. I would like to add here that as per Insurance and Safety audits the costs will be the same for all.

I have worked with Logistics Plus India as Sr. Vice President and helped my friends Peter and Bo start Martin Bencher Logistics India Pvt Ltd, but we had to close operations years ago.
Gati Shakti National Master Plan - Fast Tracking Infra Development
Gati Shakti is a digital backbone on which infrastructure projects planned by the government under the ₹110 trillion National Infrastructure Plan (NIP) will be implemented by 2025. It provides an institutional framework

Read more ...

Chardham Tunnel Project
Equipment with cutting edge technologies is making tunneling smoother at RVNL’s mega railway project and helping contractors overcome geological complexities. Sandvik’s DT 821 C and DT 922i advanced automatic

Read more ...

India’s Metro-Rail Industry Expanding Fast
The Metro-Rail segment in India is growing at a frantic pace with positive long-term prospects, supported by the impetus provided by the government by way of business-friendly policies and financial support. Use of advanced

Read more ...

Lucknow Metro - The Fastest Built Metro Rail Project
Lucknow Metro has achieved the distinction of becoming the fastest built metro rail project in the country - both in terms of completion of construction work and execution. On 25th November 2013, LMRCL

Read more ...

Ropeways - Alternative Mobility Solution in Urban India
India received its first mode of modern transportation in 1853 when the first railway line was laid from Bombay to Thane to boost industrial activities and ensure easy accessibility to heavy raw materials. In the following

Read more ...

India’s Tunnelling Industry Opportunities & Challenges
The growth of the tunnel construction in the country has been driven by a robust pipeline of projects and investments in setting up hydropower projects, developing urban mass rapid transit systems, improving road

Read more ...

Klang Valley Mass Rapid Transit Putrajaya Line in Malaysia
Stoked by their debut success with the timely completion of Kajang Line’s underground section, Gamuda Engineering found themselves pitted once more against the unique challenges of tunnelling in Kuala Lumpur

Read more ...

Sandvik DT 821C Tunneling Jumbo Setting a New Standard in Speed & Precision
A tunnelling project is a race against time and costs. Getting it right from the very beginning requires knowledge, skill and experience, as well as a proper range of equipment that fulfils the customer’s tunnelling

Read more ...

German manufacturer GHH brings special Shotcreting Machine to help complete Mumbai Nagpur Expressway
The Mumbai-Nagpur Expressway is delayed until 2022. In the meantime, a machine ‘GHH IS26’ with remarkable reliability has been specially flown in from the supplier and is in operation to help complete the project

Read more ...

CRCHI’s EPB TBM ‘Victory’ Achieves New Records in Construction of Moscow Metro
The project, located at the riverside of the Moscow River, passes under heavy traffic and crowded buildings. It includes two sections of a total length of 2947m. One is from Maple Avenue Station to No.2 Working Shaft

Read more ...

Pull Force
Pull Force is the force that a truck or prime mover can exert onto a transporter or any type of trailer. It has been a subject of much controversy and misunderstandings as truck manufacturers and end-users often do not talk

Read more ...

Fully Automated Jumbo Revolutionizing Tunneling in India
The first Sandvik DT922i, a computer controlled fully automatic tunneling jumbo, has been introduced by Sandvik Mining and Rock Technology in India with a vision to achieve high levels of safety, productivity and

Read more ...

HDD Machines Best Suited for Gas, Cable, and Sewerage  Pipeline Projects
Horizontal Directional Drilling is a technology in pipe and utility installation that allows greater accuracy and flexibility in placement and ends the need for costly digging, large crews, road closures and other

Read more ...

Progress Maschinen & Automation: Reinforcing cages for tunnel construction and wind-energy solutions
Special knowledge is required for building tunnels and wind energy plants in order to implement demanding projects. The facilities and manufacturing processes required for such projects can be adjusted well in advance for

Read more ...

Tunnelling for Science - Special formworks from Doka for tunnel system at CERN
The Large Hadron Collider (LHC) at CERN is the biggest particle accelerator in the world – and growing. To equip the LHC for new, more ambitious experiments in the next decade, the accelerator is currently

Read more ...

Proven Technology in Use
The river has its source at over 3000 meters high in the snow-covered Andes. It reaches the Pacific Ocean after 250 km. On its way, it overcomes a considerable gradient and is, therefore, ideally suited to generate electricity

Read more ...

CREG: Distinctive Amongst Peers
Tan Shunhui, Chairman, CREG, discusses the competitive advantages of the company’s tunneling equipment and solutions, emerging opportunities in developing countries, factors driving its growth and success across

Read more ...

CRCHI TBM at work in Hangzhou Genshan East Road Crossing River Tunnel
15-meter mega Slurry TBM rolled off the assembly line at CRCHI. The excavation diameter of the equipment is 15.01 m, its total length is about 130 m, total weight is about 4300 t, installed power is about 9755 kW, rated

Read more ...

Open-type TBM produced by CRCHI creates a new record in China
Being the longest water delivery line in the history of Jilin province, transferring water from Songhua River into Central Jilin Province will transfer the largest capacity of water and cover the largest areas. The water diversion

Read more ...

×
Sign-up for Free Subscription
'India Construction Week'
Weekly e-Newsletter on Construction Industry
Get the latest news, product launches, projects announced / awarded, government policies, investments, and expert views.
Click here to subscribe.
×