Case Study

Maersk LineOpening up a new route to the high end

Maersk Line and Implement Consulting Group


Maersk launched the Daily Maersk service in 2011 to change the rules of the game in the highly conservative shipping industry. The new business model was designed to tackle three fundamental industry challenges: unreliability, environmental impact and complex services.

As a consequence, Maersk Line has turned challenges into opportunities and succeeded in opening up a high-end market segment demanding high reliability, fast delivery and high consistency.

Arguably, one of the most impressive strategic moves a company can make is to rethink the existing market and fundamentally challenge competitors on a new set of competitive factors. When Apple launched the iPhone it was a slap in the face to an industry stuck within dominant logics of traditional mobile phone design, user interfaces and revenue models. When Nestle introduced its simple and convenient Nespresso coffee brewing solution, they shook up the existing ways of preparing a premium cup of coffee – no more need for highly complicated manual drills to brew a quality shot of espresso.

Translating deep customer understanding into unique and differentiated solutions

Both iPhone and the Nespresso machine are sustaining innovations that have altered the rules of the game by translating deep customer understanding into unique and differentiated solutions for the existing customer base. Neither has dramatically expanded the market. More precisely, both market offerings have taken the companies upmarket by targeting the latent needs of highly profitable customer segments that were willing to accept remarkably higher price points than the industry average. Add to that, the intelligent razor-and-blades logic underlying both business models with constantly recurring revenues through sales of mobile phone apps and coffee pods.

The key to seizing the high end is customer centricity. While some companies are still focusing on selling great products and services with fantastic features, customer-centric companies take an outside-in perspective and focus on providing unique benefits aligned with segment-specific needs and wants. Further, the best companies are able to document and prove the value created for a specific customer in return for the customer’s associated payment.

In some industries, the validity of the customer value proposition can be documented in monetary terms while other industries need to prove measurable value creation on a broader range of parameters that are key to customer satisfaction – e.g., sustainability, speed, convenience, reliability, flexibility. Oftentimes, the unique features and new competitive factors that create the basis for differentiation are to be found in communication, sales approach or distribution network and not the product itself. Customer benefits outdo technical features.

A giant challenges industry conservatism

One might argue that big companies seldom act as nimble and agile as a speedboat but popular belief does not always turn out to hold true. As a matter of fact, one of the biggest changes in the shipping industry has been introduced by one of the industry giants, Maersk Line, in 2011.

The shipping industry plays a key role in the global economy. It has grown and changed dramatically in the last thirty years. Globalisation, regulatory changes and the impact of economic growth have resulted in increased efficiencies, increased merger activity, and increased growth. Since 1970 international cargo has more than trebled and the industry today is facing increased competition, dropping demand, price pressure and ever more demanding customers. In order to meet these demands, shipping firms make large investments in rolling and floating stock, and funding these investments is crucial to sustaining growth.

One of the more recent investments comes from Maersk Line, the world’s largest container shipping company with 25.000 employees, 600 vessels and more 300 offices around the globe. The investment is called Daily Maersk and is basically a service aimed at reducing the inventory of the shipper through increased reliability, frequency and consistency.

Prior to Daily Maersk, on average only 1 in 2 containers arrived on time. Customers with explicit needs for having goods delivered on time had compensated for the lack of reliability by building expensive safety stocks at critical locations. This resulted in a negative impact on the customers’ supply chain efficiency, impacting cash flows and profitability.

In the spring of 2010, Maersk Line interviewed selected customers to gain more insight into the needs of customers. Maersk Line worked from a hypothesis of being able to perform daily shipments and deliver 100% reliability on the Asia-Europe trade line based on a redundant network. Analysis showed that daily shipments, increased consistency and reliability would mean significant inventory reductions and up to 500 USD saved per container for customers. In the beginning, most customers were sceptical towards the new service reliability of Daily Maersk but it quickly proved shippers that it will be able to remove shipping buffers that had been built in to the lead time.

With Daily Maersk, customers could suddenly have absolute confidence in the date containers would be available for delivery, improving inbound planning and also providing flexibility if they arrived early and cargo was required urgently. The collaborative approach that the Maersk Line sales team uses when selling Daily Maersk is quite unique for a shipping line. The sales team seeks to understand and map the supply chain of their customers and this allows Maersk Line to gain a better understanding of customer business processes and further opportunity to drive value and reliability for our inbound shipments.

Daily Maersk was designed and launched in the summer of 2011 and has proven quite successful. Although ”absolute reliability” was not achieved (98%), 76% of 175 surveyed customers acknowledged the benefits from Daily Maersk and found that their transportation chain had become more efficient. 60% of surveyed customers had directly saved on logistics costs.

Maersk Line firmly believes that it has changed and as a direct result customers are seeing their supply chains become more efficient. In quite a few cases Maersk Line has been able to demonstrate the value in terms of US dollars as a direct effect of using Daily Maersk. Further, shipping with Daily Maersk saves 13% CO2 emissions per TEU moved compared to the industry average on the Asia-Europe trade.

Unlocking the value of customer centricity

To launch the Daily Maersk business model, Maersk has taken a customer-centric path to unlock new potentials of the existing market. Some of the key success factors that can be observed are:

Implement a culture of customer centricity and build on deep customer insights

Maersk Line has worked for many years to build a foundation of customer centricity initially within the framework of the existing business model. In 2009, an initiative to improve customer experience was launched building on in-depth customer research revealing several unknown customer pain points. Reliability was one of the key issues observed. Consequently, Maersk Line introduced “proactive notifications” in order to support customers who make changes in logistic operations or inventory in case of delays.

The initiative paved the way for an emotionally informed view of the customer. When designing Daily Maersk, deep customer insights were used as the foundation for business model design. This included understanding the details of the customers’ supply chain processes and mapping the customer’s journey to assess interactions with Maersk and spot the real pains and needs to be addressed. Maersk continues to challenge industry traditions and has secured an astounding 873,838 likes on Facebook and a comprehensive presence on more than 8 other social media platforms to listen and talk to customers.

Make the customer value proposition tangible and prove value creation

Different pain killers can relieve a customer pain. While “proactive notifications” tried to dampen the pain of delays, Daily Maersk has addressed the root cause and is dramatically reducing the risk of delays completely. In other words, customer value creation has been boosted. For Maersk, it has been key to both position and differentiate Daily Maersk in a convincing and trustworthy way. To really convince customers, Maersk does not rely on fancy marketing campaigns alone but on hard facts. All customers are offered customized and industry-specific value propositions. The value creation potential is initially assumed, but through customer interactions it is verified, proved and calculated so that benefits in monetary terms are clearly outlined for customers. Further, Maersk makes sure to tailor value messages to different stakeholders within the customer’s organisation.

Changing the way of selling and building the right competences

Traditionally, transportation services have been thought of as simple transactional offerings resulting in fairly lowlevel tactical sales dialogues with customers. Daily Maersk has changed that by introducing proven value propositions that offer to improve the performance of the customer’s supply chain. To move from tactical talks to strategic dialogues about supply chain performance improvements required a new business model and also building new leadership, sales and marketing capabilities at Maersk.

Therefore, Maersk is continuously working on installing a stronger commercial mindset in the organisation. Daily Maersk is based on getting early into the buying cycle and addressing pains higher up in the customer organisation. To help Maersk succeed, capabilities and processes for engaging Maersk executives in the sales cycle have been built and new value-based ways of working with sales opportunities have been developed to secure aligning the new business model with sales force capabilities.

Combine thinking big and bold with a prototyping mindset

While differentiation can open up a new high-end segment, shipping is fundamentally a volume operations business. To succeed with a new business model in this well-established industry, small bets are simply not a sustainable option. Maersk has wisely chosen to invest heavily, to decisively try to shape the industry into a new direction and to focus efforts on one concept. In highly uncertain and immature industries, this strategy would most likely have failed. E.g., the current cash burn and expected fall of Better Place in the electric vehicle industry proves this point. In a mature industry, the introduction of a new high-end business model needs to be powerful and supported by a strong financial backbone. Maersk has done all of this very well and marketing and public relations efforts deserve respect. However, behind the scenes the Daily Maersk concept was introduced five months before launch to validate the concept and fine-tune performance. In other words, thinking big when launching went hand in hand with a learning and prototyping mindset.

At one end of the business model innovation continuum, you will find agile start-ups appearing out of the blue ready to disrupt mature industries from the low end. At the other end, you will find big and powerful players like Maersk Line that moves up-market to tap the potential of underserviced and highly demanding customers. Daily Maersk is a brilliant case in point that business model innovation at its core is all about customer centricity and finding the best way of fulfilling both articulated and latent customer needs.

Sources: Management interviews, Implement Consulting Group analysis, and industry reports