MSC is about to overtake Maersk as the largest maritime group

It’s been 50 years, but now Gianluigi Aponte, the top secret tycoon, is about to reach the top.

The Italian businessman’s Mediterranean Shipping Company, which he founded half a century ago, is about to take the crown as the world’s largest container group, beating AP Moller-Maersk.

Having sneaked into one of its Danish rival’s top executives and allowed an outsider to take on a leadership role for the first time, the family group seeks to consolidate its position at the heart of global supply chains.

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

“It’s about taking my experiences, my ideas and my foresight and combining them with the great attributes of MSC. . . we are privately owned, we have the long goal “.

It is possible that Toft has arrived at the right time to grow the Italian-Swiss group, which has started an aggressive expansion, as it is taking advantage of the pandemic that has generated record profits on the sea lines due to the growing rate of transportation caused mainly by the boom in online shopping.

The profitable performance of shipping lines follows more than a decade of overcapacity that forced the consolidation of capacity-sharing alliances.

While Toft insists it “doesn’t mind the size,” the company has bought about 60 second-hand boats since August with 43 new ships on the charter, according to consulting firm Alphaliner, in a bid to show its opportunism.

MSC is highly secretive, but the group’s annual revenue would likely exceed $ 25 billion before the pandemic, as it is expected to grow more than rival Maersk in terms of capacity with the largest order book for new tonnage.

Toft, described as ambitious, rational and impatient by his loved ones, will have to find a balance between his desire to leave a mark and face the line with the billionaire owner and his family.

Apontes has maintained close control over the company’s decision-making and culture for decades as it expanded beyond freight transportation to cruises, terminals, inland logistics, security and other areas.

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

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

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

Toft can use your experience in Maersk to help you balance family and business interests.

Nearly 30 years ago, Danish tycoon Maersk Mc-Kinney Moller gradually withdrew from operational involvement as his company became more transparent and transactional. “He’s done a somewhat similar trip before,” said Lars Jensen, a shipping analyst at Vespucci Maritime.

In particular, Toft is likely to try to leave its mark by placing a greater focus on optimizing the global network, rather than focusing primarily on improving each of its 215 trade routes. This is to ensure that the goods arrive on time and that the needs of the customers are met, while the ships are as full as possible.

It also tries to make the secret company, which in the past has shunned the public’s attention, be more communicative and notorious on social media.

This measure partly reflects the strong focus of maritime transport due to the delays induced by the pandemic and rising prices and their impact on the climate.

Freight forwarders, who plan and coordinate routes for freight forwarding, 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 to upgrade their obsolete computer systems to improve these services and information for customers, which will likely involve significant investments.

Digitization 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 Amazon and Alibaba.

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

Another challenge for Toft is how to reduce carbon emissions. According to the NGO Transport & Environment, the group was the sixth most polluting in Europe in 2020 and only coal plants emitted more CO2.

The chief executive is taking a more proactive stance on the issue, and has recently warned of EU climate action on maritime transport, which he said could have the opposite effect of his intention to increase emissions. .

In principle, it supports a global carbon tax, but believes the industry has no visibility into when low-carbon fuels will be available at scale.

The group has also had to face unpleasant attention when it emerged that MSC was the main debtor of Credit Suisse’s $ 6.8 billion main fund linked to Greensill, the collapsed supply chain financing group.

MSC said there is no material impact of the $ 321 million related to the frozen fund. “It’s a thing of the past, we’ve solved everything we need to solve,” Toft said.

In addition to Greensill, analysts and bankers speculate on the company’s cruise division, the fourth largest in the world, and its impact on the wider group, as the sector has suffered during the pandemic.

However, the strong profits for this year’s containers could cause its cruise to arm the industry’s strength to be taken into account, although there are few indications that limit the group’s overall ambitions.

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