MSC poised to overtake Maersk as biggest shipping group

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New CEO of family-run business to manage aggressive growth as pandemic lifts profits.

It has taken 50 years — but now Gianluigi Aponte, the secretive shipping magnate, is about to reach the summit.

The Italian businessman’s Mediterranean Shipping Company, which he founded half a century ago, is on the verge of taking the crown as the world’s biggest container group, overtaking AP Moller-Maersk.

Having poached one of his Danish rival’s top executives and allowing an outsider to take a leadership role for the first time, the family-run group is seeking to cement its position at the heart of global supply chains.

“I think it’s a perfect opportunity to bring the best of the two worlds together,” Soren Toft, who joined the private company as chief executive in December after 25 years at Maersk, told the Financial Times.

“It’s about taking my experiences, my insights and my foresight and combining it with the great attributes of MSC . . . we are privately owned, we have the long lens.”

Toft may have arrived at the right moment to grow the Italian-Swiss group, which has embarked on an aggressive expansion, as it takes advantage of the pandemic that has delivered record profits to the shipping lines on the back of surging freight rates largely caused by the online shopping boom. 

The profitable run for shipping lines follows more than a decade of overcapacity that forced consolidation and capacity-sharing alliances.

Although Toft insists that “we are not bothered by size”, the company has bought about 60 second-hand vessels since August with 43 new ships on order, according to consultancy Alphaliner, in a show of its opportunism.

MSC is highly secretive, but annual group revenues were likely in excess of $25bn before the pandemic as it is set to grow larger than rival Maersk in capacity terms with the biggest order book for new tonnage.

Toft, described as ambitious, rational and impatient by those close to him, will have to strike a balance between his desire to make a mark and toeing the line with the billionaire owner and his family.

The Apontes have retained close control over the company’s decision-making and culture for decades as it expanded beyond cargo transport into cruises, terminals, inland logistics, security and other areas.

The founder and former Neapolitan ferry captain has also retained a maritime family feel at the group, earning fierce loyalty from its more than 100,000 employees, even sending out personalised letters to staff inviting them to ship-naming ceremonies, say people familiar with the company.

Chart showing shipping capacity, existing fleet vs order book

Another key feature of the company is its extremely short chain of command, with Aponte intimately involved in operational business decisions.

Line managers, accustomed to direct access to the owners, meet him and senior family members on Saturday mornings — and now Toft, who shares the ninth floor of MSC’s headquarters in Geneva with three of the family.

Toft can use his experience at Maersk to help with balancing family and business interests.

Almost 30 years ago, Danish shipping magnate Maersk Mc-Kinney Moller gradually retreated from operational involvement as his company became more transparent and transactional.

“He has been on a somewhat similar journey before,” said Lars Jensen, a shipping analyst at Vespucci Maritime. In particular, Toft is likely to try to make his mark by placing a greater focus on optimising the global network, rather than primarily focusing on improving each of its 215 trade routes. This is to ensure goods arrive on time and customer needs are met, while vessels are as full as possible.

He is also trying to make the secretive company, which has shied away from public attention in the past, more communicative, noticeably on social media.

This move partly reflects the strong focus on shipping because of pandemic-induced delays and price rises and its impact on the climate.

Freight forwarders, which plan and co-ordinate routes for shipping goods, and analysts say MSC has a reputation for poor service, despite improving in recent years

They add that a key priority for the new boss will be updating its outdated IT systems to improve these services and information for customers, which will probably involve hefty investments.

Digitisation is a particular challenge for the company as it opens up the shipping industry to new competitive pressures from freight forwarders using digital technologies and even the likes of Amazon and Alibaba.

“The whole uberisation of the supply chain is a threat. If someone else is providing the space on your vessels, then you have to take the price,” said Stephen Cotton, general secretary of the International Transport Workers’ Federation. “They don’t want to be vulnerable to a high-tech company.”

A further challenge for Toft is how to reduce carbon emissions. The group was Europe’s sixth largest polluter in 2020 with only coal plants emitting more CO2, according to NGO Transport & Environment.

The chief executive is taking a more proactive public stance on this, warning recently about EU climate measures on shipping that he says may have the reverse effect of their intention by raising emissions.

He supports a global carbon tax in principle, but believes the industry lacks visibility on when low carbon fuels will be available at scale.

The group has also had to face some unwelcome attention when it emerged that MSC was the largest obligor of Credit Suisse’s main $6.8bn fund tied to Greensill, the collapsed supply chain finance group.

MSC said there is no material impact from the $321m related to the frozen fund. “It’s a thing of the past, we’ve settled whatever we need to settle,” said Toft.

Besides Greensill, analysts and bankers speculate about the company’s cruise division, the world’s fourth largest, and its impact on the broader group as the sector has suffered during the pandemic.

However, bumper profits for containers this year could make its cruise arm the industry’s force to be reckoned with, while there is little sign of it limiting the group’s overall ambitions.

“We see a number of areas where we still have plenty of runway ahead of us,” said Toft.

SOURCE: Financial Times

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