Letter from the Chair and the CEO

Dedicated to fulfilling our customers’ supply chain needs

In 2023, our purpose of ‘Improving life for all by integrating the world’ was prominently reflected in our role as leaders in the decarbonisation of the maritime industry and our consistent investments into advanced and robust logistic solutions, aimed at equipping our customers for various type of disruption and ensuring the resilience of global supply chains.

Together with our customers, we navigated a year of profound change in the global logistics industry, marked by a rapidly evolving market environment. We are pleased to report that A.P. Moller - Maersk delivered financial performance in line with our guidance for the year, demonstrating resilience and adaptability throughout these highly transformative times.

Markets normalised after the years of lock-down and subsequent boom in consumer demand. The market correction began in the fourth quarter of 2022 as supply chain bottlenecks gradually eased. In the first six months of the year, we saw a trend of reducing stock, leading to a decrease in demand. The second half revealed a new industry standard, marked by robust volumes but constrained by pricing pressures due to over-supply in shipping, with no immediate signs of more ships being idled or recycled.

Measures for a changed reality

During the year, we actively responded to the shifting environment. Early cost containment measures were initiated, deployed capacity was adjusted, and efficient management of Ocean unit costs, cost per move in terminals, and SG&A cost level in Logistics & Services helped safeguard our financial performance. Our workforce was realigned with our evolving book of business, reducing our global staff from 110,000 to around 100,000. Moreover, we prudently reduced our capital expenditure plans for 2023 and 2024.

Post-pandemic resilient supply chains

Despite the absence of significant congestions, the vulnerabilities that triggered disruptions during the pandemic years still linger in global supply chains, and new challenges keep emerging. Supply chains have become increasingly complex and fragmented, and customers are dealing with uncertainty from geopolitical tensions and changing consumer behaviour causing fluctuating demand.

Consequently, steps are taken to diversify sourcing and nearshore production to enhance resilience and flexibility in logistics.

Throughout the year, we have further deepened our understanding of our customers’ diverse supply chain needs to help them develop resilient solutions. We remain committed to manage any complexities our customers may experience by continuously improving and innovating our services and offerings.

Additionally, Terminals is further enhancing supply chain efficiency by expanding current terminals and establishing new ones. Key projects include the USD 1 billion expansion in Rotterdam, the Netherlands, advancements in automation at Pier400 in Los Angeles, USA and plans for new terminal developments, like the announced strategic partnership in Hai Phong, Vietnam. Terminals consistently demonstrates robust business performance, maintaining a strong focus on cost management, safety and operational excellence.

Digitising to deliver on customer needs

We have advanced further on enhancing the operational reliability of our digital infrastructure, ­ enabling very stable execution of business and significantly improved system availability. Furthermore, we have hit some fundamental milestones in our efforts to develop modern platforms across the supply chain. Aiming to unlock truly integrated logistics for our customers, we have moved from basic visibility to multi-carrier, multi-modal visibility.

Beyond this, we have made progress on standardising and rolling out our inland platform and our warehousing solution across regions. Focus is now on unlocking productivity gains through further platform integration and work-flow automation.

Decarbonising logistics

In 2023, we marked a noteworthy achievement in our efforts to decarbonise the logistics industry by introducing the world’s first green fuel-enabled vessel – Laura Mærsk. As a pioneering force in decarbonising the industry, we are acutely aware that we heavily rely on the partnership and support from the industry, from regulations and, fundamentally, from our customers.

To transition away from fossil fuels, collaboration across sectors is crucial. By 2030, A.P. Moller - Maersk alone will need up to 5 million tonnes of green fuels to deliver on our green pledges, while current global production of green methanol is under 100,000 tonnes. The need for green fuels in shipping is immense and the challenge to provide it is too big a task for any one company or investor to manage alone.

Our industry’s progress depends on robust regulatory frameworks. At UN’s annual COP meeting in November 2023, we stood united with leading players in our industry calling for lawmakers to introduce measures that – if implemented – will accelerate the decarbonisation of global maritime transport. Together with CEOs from four of the largest container carriers, we proposed in a joint declaration a carbon tax scheme to help close the price gap between fossil and green fuels recognising that not all customers are ready to pay the higher prices currently associated with sustainable transport.

Reconfirming our transformational journey

While we continue to streamline our organisation and operations, we remain dedicated to our strategy of fulfilling our customers’ diversified supply chain needs while pursuing growth opportunities across our Terminals and Logistics & Services businesses. We are pleased to note great commercial wins, which reflect the value our customers place on our integrated logistics solutions and close partnerships.

In our Ocean business, focus is steadfast on maintaining best-in-class margins and building an even more efficient and reliable future Ocean network. In Logistics & Services, we are looking to expand our offering while optimising performance and driving growth. Meanwhile, in Terminals focus is on continued optimisation and ongoing growth initiatives.

The market dynamics of 2023 underscored the critical importance of diversifying our revenue streams beyond the Ocean business and forging stronger, more collaborative relationships with our customers. These efforts are key to our ongoing success and adaptation in a rapidly evolving market and to our strategy of being the global integrator of logistics.

Thank you for your support

2023 ended with multiple distressing attacks on cargo ships in the Red Sea and the Gulf of Aden, including two A.P. Moller - Maersk vessels. We are horrified by the escalation of this unfortunate conflict. Ensuring the safety of our people and customers’ supply chains is our priority. We are encouraged by the strong international support to restore this essential shipping lane. Our sincere wish is for rapid control of the situation, to allow for the resumption of safe transportation in 2024.

In closing, we would like to express our sincere gratitude to all A.P. Moller - Maersk colleagues around the world for their relentless efforts and unwavering dedication. We would also like to express our appreciation to the Executive Leadership Team and the Board of Directors. In particular, we welcome Kasper Rørsted, who joined the Board in 2023.

Last but not least, we are extending a profound thanks to our customers. The support and partnership from our customers are the driving force behind our commitment to delivering excellence in global logistics.