Maersk’s Sailing Routes: Reroute, Reorganize, or Relax

A.P. Møller – Mærsk A/S (Maersk) dominated the shipping business as the world’s second-largest container shipping company in terms of fleet size and capacity of handling cargo. In December 2023, Houthi attacks on various Maersk vessels passing through the Red Sea interrupted supply chains from Asia to Europe. One Maersk vessel was hit by a missile while travelling from Salalah, Oman to Jeddah, Saudi Arabia. Maersk temporarily halted all its container shipments via the Red Sea route. One week after resuming travel, a second Maersk vessel was hit. Container ship operations in the Red Sea were again forced to stop. The US Central Command and other co-operative groups such as the Combined Maritime Forces intervened to help normalize the unrest created by Houthi rebels but their efforts had little impact. Maersk’s share price fell by almost 5 per cent in December 2023. Maersk was wondering how to resolve its situation and move forward. Should it evaluate alternative routes or transportation modes to continue providing seamless shipping services to its clients? Should Maersk continue or enhance its recently implemented policies for transit disruption fees? Or should Maersk follow a demand-driven route, in addition to the disruption fees, to maintain vessel and crew safety?

This case is suitable for courses such as global logistics, logistics management, supply chain management, and international business at the senior level graduate or post graduate course. The case provides an opportunity to teach concepts such as the operation of a logistics business, risks in international logistics, and potential crises in global trading. The case covers various topics including global logistics and trade, logistics management, and challenges in the shipping industry. After working through the case and assignment questions, students will be able to<ul><li>conduct risk assessment to identify and prioritize the most significant risks in logistics operations and develop appropriate strategies to prevent or reduce them.</li><li>understand and apply the political, economic, social, and technological (PEST) framework to analyze a company’s business conditions and to predict prospects and measures for it to remain competitive; and</li><li>explain the need for crisis management in the shipping industry and evaluate suitable alternatives.</li></ul>

• International Trade
• Logistics
• Marine Risk
• Crisis Management