Maersk is one of the largest shipping companies in the world. The company transports tons of cargo every year. This company faces a number of challenges that hinder its performance. The rising cost of oil and the decline in freight are among these challenges (Martin, 2016). As a result of these challenges, the company reported disappointing earnings. As it enters the future, Maersk should brace itself for other challenges. The company can institute measures to mitigate against these challenges.
Terrorism is one of the biggest challenges that freight companies face. The coast of Somalia which is a key route for many freight companies is particularly dangerous (Shortland & Vothknecht, 2011). In the past, terrorists have attacked ships and taken crew hostage. This is a problem that Maersk could face. Partnering with law-enforcement agencies is among the measures that the firm can institute to protect its operations. An international team of security forces monitors the waters that freight companies use (Shortland & Vothknecht, 2011). This team has made waters more secure but has been unable to completely eliminate the threat of terrorism.
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Apart from the threat of terrorism, intense competition is another challenge that Maersk needs to brace for. As global trade intensifies, more companies are entering the freight industry (Vestager, 2015). These companies are bringing cheaper solutions and threaten to dislodge such established players as Maersk. Maersk needs to develop measures to tackle the competition. Cheaper services are among the measures that the company can institute. However, given that the company recently reported disappointing earnings, offering cheaper services may cause more damage than good. The company can instead accompany its services with extra features. For example, Maersk can partner with insurance companies to offer subsidized insurance for the goods that it transports. The company can also enable its customers to easily track their shipments. While these measures do not guarantee that Maersk will be able to outperform the competition, they will offer some insulation against the competition. Since the freight industry is very volatile, Maersk needs to move with speed to implement these solutions. As it does this, the company will be poising itself for continued growth.
References
Martin, W. (2016). Global Trade is worse than it was during the Financial Crisis. Retrieved
13 th October 2017 from http://www.businessinsider.com/maersk-ceo-warns-about-problems-facing-global-trade-2016-2?IR=T
Shortland, A. & Vothknecht, M. (2011). Combating “Maritime Terrorism” off the Coast of
Somalia. European Journal of Political Economy, 27 (Suppl 1), S133-S151.
Vestager, M. (2015). Competition in Maritime Transport. Retrieved 13 th October 2017 from
https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/competition-maritime-transport_en
