THEME | SUCCESSFUL SEAFARERS
Seafaring has always had special significance for Denmark. Despite being a small country, Denmark is one of the world’s leading shipping nations
By Jan Aagaard
When you consider Denmark’s geography, it is not surprising that the Danes have always been a seafaring nation. Denmark is a small country surrounded by sea, but if you count in its 400+ islands that pepper its waters, the country actually has a longer coastline than India. To trade with each other and the world beyond, the Danes have had to sail out since the days of the Vikings. So throughout its history, Denmark has been a maritime nation.
Denmark is one of the world’s leading shipping nations, and merchant vessels under Danish control today transport 10 percent of world trade. There are around 100 Danish shipping companies encompassing everything from Maersk Line, which is the world’s largest container shipping company, to a diverse group of small and medium-sized companies which typically specialise in specific areas.
Although many of the ships have their home port in Denmark, the bulk of the fleet never sees a Danish harbour. Shipping is without comparison Denmark’s most globalised business, and around 80 percent of its activities lie outside Europe, with the US and China the largest markets.
Trading posts all over the world
It is nothing new for Danish merchant ships to ply the seven seas and make a living from trade between other countries. In the 1500s, Denmark shipped supplies to the North Atlantic colonies of Iceland, the Faroe Islands, Greenland and Norway, which was also under Danish rule.
Danish shipping attained international range during the rule of King Christian IV in the 1600s, when Denmark established a number of trading companies, including the Danish East India Company. These companies acquired trading posts and colonies in India, West Africa and the Caribbean. Denmark thus developed as a colonial power across three continents in addition to interests in the North Atlantic and Norway.
”Christian IV was one of the first promoters of international shipping. Besides the trading companies, he founded the district of Christianshavn in Copenhagen, based on the Dutch model as a centre for shipping and trade. Colonial trade was the foundation for the spread of Danish shipping around the world,” says maritime historian and museum curator Kåre Lauring of the Danish Maritime Museum.
The real heyday for sailing ships was at the end of the 1700s, when Denmark occupied a prominent position in world trade. During the many wars that were fought in the second half of the century, Denmark remained neutral and was virtually the only European maritime nation that could freely sail to the colonies. Supported by the state, Danish sailors understood how to exploit the situation to advantage.
”Danish ships carried the belligerent nations’ goods home to Europe. They brought sugar from the French colonies in the Caribbean to France, cotton from India and tea from China to Britain, and goods from Indonesia to the Netherlands. Just as it is today, Danish shipping in those days was primarily concerned with trade between other countries,” says Kåre Lauring.
Denmark amassed huge earnings during this time, described as the flourishing period of Danish history, and the trading companies exploited the opportunities to the utmost. They used not only Danish ships, but also equipped ships of other nations with the Danish flag and with Danish papers so that they could pass the blockades and sail out to sea. Moreover, much of the tea that was brought back to Copenhagen was later smuggled into Britain, which imposed high import duties on tea.
Denmark’s trade adventure ended when the country joined the Napoleonic wars in 1807 and as a result lost both its navy and hundreds of merchant ships. Denmark was no longer a great maritime nation.
The modern merchant fleet
After a time however, Danish shipping began to recover as steamships made their first appearance. At the end of the 1800s a number of steamship companies were founded, that remain significantly represented in the Danish merchant fleet.
”The trading basis of the steamship companies was Danish agricultural exports, and trade between Western Europe and the many ports in the Baltic Sea, which in winter were supplemented with shipping fruit in the Mediterranean Sea,” says Kåre Lauring.
Some of the new shipping companies also began to operate shipping lines between Europe and Asia, a trend which through the 1900s expanded to include more shipping companies and more foreign destinations. Danish shipping companies also started operating tankers, bulk carriers and refrigerated ships, while the shipping lines of the 1970s were converted to container traffic.
Today container shipping lines remain an important area for the Danish shipping industry, which largely specialises in the more demanding sectors of sea transport. In addition to shipping lines, the shipping companies concentrate especially on product tankers and offshore services.
”Danish shipping is characterised by companies dealing with more advanced areas of the industry. For example, modern shipping lines are a complex puzzle that require efficient management systems and well-functioning organisations,” says Jan Fritz Hansen, Executive Vice President of the Danish Shipowners’ Association.
”We specialise at the heavy end of the value chain, where one competes not only on price but also on quality, precision, knowledge and special competences. It is part of the reason why a small country can continue to be one of the most successful maritime nations in the world,” says Jan Fritz Hansen.
Good business acumen
Another characteristic of modern Danish shipping is its good business acumen, which not only draws on centuries of experience and training traditions but is also characterised by an ability to navigate in an unpredictable globalised world.
”There have been many talented traders in the industry in recent decades. They have developed a flexible business model where Danish shipping companies supplement their own ships with chartered tonnage and the operation of ships they do not own themselves. It puts them in a better position to handle the fluctuations that have always characterised the business,” says Jan Fritz Hansen.
A third success factor for Danish shipping that the vice president identifies is the good framework conditions. ”The Danish government has ensured that stable framework conditions are in place for running international shipping, which is critical for a global and cyclical business,” says Jan Fritz Hansen.
Danish shipping strengthened by crisis
Foreign exchange earnings from Danish shipping are expected to be much improved this year, and shipping companies are ready for new investment and growth
By Jan Aagaard
Just like its competitors, Danish shipping has felt the consequences of the global economic crisis. But all the indications are that Danish shipping companies have navigated the crisis better than expected. Currency earnings from Danish shipping in 2010 are expected to reach EUR 21.5 billion, an increase of around EUR 2.7 billion compared to 2009. The record year was 2008, when Danish shipping companies earned EUR 25.5 billion.
”Danish shipping companies seem to have fared better during the crisis than many competitors, due to sensible capital resources and a flexible business model which allows relatively rapid cost cutting. The companies have downsized their fleets, trimmed their organisations and have become generally more streamlined during the crisis,” says Jan Fritz Hansen, Executive Vice President of the Danish Shipowners’ Association.
Investments and growth ahead
Against this background, the shipping companies are generally positive about the future and are ready to invest and create new growth. Danish shipping companies already have more than 250 ships on order.
”Danish shipping companies have shown what they are capable of, and have emerged strengthened from the crisis. Now they are ready to invest again in a more unpredictable market, and they are well prepared for it,” says Jan Fritz Hansen, who adds that the same applies to other challenges such as climate impact and rising energy prices.
”Denmark has one of the world’s youngest and most modern merchant fleets with an average age of just 7 years, making it one of the least polluting and most energy-efficient fleets in the world. It is a clear competitive advantage, which with the influx of new ships will make Denmark even stronger,” says Jan Fritz Hansen.
Danish shipping companies operate all over the world and transport about 10 percent of world trade.
Danish shipping in numbers
The five largest shipping companies account for around 95 percent of the Danish shipping industry’s revenues
The largest Danish shipping companies: A.P. Moeller – Maersk, Torm, Norden, DFDS, J. Lauritzen
New ships on order from Danish shipping companies (as of october 2010): 243 ships
The average age of ships in the Danish fleet, making it the youngest in the world: 7 years
The approximate number of shipping companies in Denmark: 100 companies
Danish shipping’s record earnings in 2008: 190 billion DKK (EUR 25.5 billion)
The total tonnage of ships under Danish control: 55,000,000 tons deadweight (DW)
The number employed in Danish shipping companies: 25,000 people
The percentage of world trade transported by Danish shipping companies: 10 %
Denmark shipped supplies to the North Atlantic colonies of Iceland, the Faroe Islands, Greenland and Norway, which was also under Danish rule.
During the rule of king Christian IV Denmark established a number of trading companies, including the Danish east India Company. These companies acquired trading posts and colonies in India, West Africa and the Caribbean.
The real heyday for sailing ships. During the many wars that were fought in the second half of the century, Denmark remained neutral and was virtually the only european maritime nation that could freely sail to the colonies.
Denmark’s trade adventure ended when the country joined the Napoleonic wars in 1807 and as a result lost both its navy and hundreds of merchant ships, but at the end of the 1800s a number of steamship companies were founded.
Some Danish shipping companies began to operate shipping lines between europe and Asia, a trend which through the 1900s expanded to include more shipping companies and more foreign destinations.
Danish shipping companies are international leaders in container transport, product tankers, bulk transport and offshore. Danish shipping companies operate worldwide. The most important markets are North America and the Far east.
From Greenland to Somalia
The modern Danish Navy operates from the icy seas around Greenland to the tropical waters off the Horn of Africa. It is increasingly involved in international duties and in 2010 headed one of NATO’s Standing Naval Forces
By Jan Aagaard
The Danish warship Esbern Snare was on patrol in the Gulf of Aden off the Somali coast, when a message came in over the radio. A patrolling Japanese aircraft had spotted suspected pirates in a boat just 30 nautical miles from the Danish vessel.
Esbern Snare’s helicopter took to the air and attempted to stop the suspected pirates by firing warning shots ahead of the boat. The initial salvo did not cause the boat to stop however, and since the boat posed a threat to merchant ships in the area, warning shots were then fired across its bow. This had the desired effect, but it took two shots before the pirate ship stopped.
While Esbern Snare’s helicopter hovered over the drifting boat and waited for a boarding party from the Danish warship, the helicopter crew observed that the men on board the boat jettisoned a ladder, a grenade launcher and a grenade – objects that are typically used by pirates in the area.
The suspected pirates were detained and registered. Since it could not be proved that they had carried out attacks on merchant ships, they were put back in their boat with adequate supplies to reach the Somali coast, but without the means acting as command ships for the NATO operation. On board the ships is a Danishled international force of 20 commandos, in addition to the regular ship’s crew.
The background to the Danish key role is that in 2010 Denmark is leading one of NATO’s four Standing Naval Forces, SNMG1, that can be deployed for emergency duties at five days’ notice. This force took part in antipiracy operations off the Somali coast for eight months during 2010.
The Danish warship Esbern Snare during patrol in the Gulf of Aden
Photos: Defence Command Denmark
In earlier times, the principal role of the Danish fleet was to defend against incursions into Danish territorial waters. But today the fleet undertakes mainly internationally-oriented duties focused on threats such as terrorism, WMD (weapons of mass destruction) proliferation and combating piracy in waters far from Denmark’s shores.
With a history stretching back over 500 years, the Danish Navy is one of the oldest Danish institutions whose role in Denmark’s history cannot be underestimated. It has brought the country power and prosperity, but also ignominious defeat with disastrous consequences.
In the 16th century, the fleet was crucial to the nation’s security, since Denmark was constantly at war with Sweden for dominion over the Baltic Sea and its lucrative trade. At that time, the Danish fleet was bigger than the English fleet.
The Navy also helped to ensure one of the most successful periods in Denmark’s history, since the warships in the late 1700s protected the merchant ships which, as a result of Denmark’s neutrality, could sail all over the world. But the navy also suffered heavy defeats. One of the worst was the English bombardment of Copenhagen in 1807, when the the English fleet seized the entire Danish fleet.
Important roles in Greenland
Today the Danish Navy operates over an enormous area – from the waters of the Arctic to the Indian Ocean – under the auspices of both NATO and the UN, as well as Denmark’s other partners.
Nationally, the armed forces have the important job of maintaining Danish sovereignty throughout the commonwealth i.e. Denmark, Greenland and the Faroe Islands. In this respect the Danish fleet differs from those of other nations, since the navy also performs a number of civil duties such as maritime surveillance, marine environment surveillance, combating pollution and fishery inspection.
Not least in the icy waters around Greenland, the navy has an important role. Every year the navy’s ships sail over 110,000 nautical miles around Greenland, while also providing the manning and operation of numerous sledge patrols, that annually patrol 4,000 kilometres of coastline in the remote north-eastern region of the massive island.
Fishery inspection in the vulnerable Arctic waters is one of the important duties of the Danish Navy. Another is search and rescue in an area where the water temperature is life-threateningly low all year round, and there can be hundreds of nautical miles to any other source of aid than the navy’s ships and helicopters. The navy also helps climate scientists, meteorologists, biologists and other groups who need to visit areas of Greenland where means of transportation are limited.
The Danish Navy’s increased focus on international missions means that it needs completely different types of ship than previously when its duties were mainly confined to coastal waters. A significant renewal of the fleet is therefore being undertaken. In 2003-2004 the fleet acquired the support ships Esbern Snare and Absalon, which will be joined over the next three years by three frigates. The oldest ship in the Danish Navy is the Royal yacht Dannebrog from 1932. It is still used by the Danish Royal family for their annual summer cruise around the country.
Loaded with wind turbines
A2SEA, one of Denmark’s many niche shipping companies, specialises in installing offshore wind turbines and operates a small fleet of specialised ships. The market is growing strongly and more ships are on the way
By Jan Aagaard
A2SEA ships at work at Robin Rigg off the Scottish coast (left) and Rødsand off the Danish coast (right).
Photo: Ian Cormack for A2SE A (left). Photo: JW Luftfoto for A2SE A (right)
Just as Denmark is a significant global player in merchant shipping, so it is also among the major players in the wind industry, and in the shipping company A2SEA both competences go hand in hand. A2SEA is one of Denmark’s many smaller shipping companies which specialise in a particular area – in this case the installation of offshore wind turbines.
Offshore wind power is becoming more widespread, particularly in Northern Europe, where Denmark has taken a pioneering role and until very recently had the world’s biggest offshore wind farm (that accolade has now passed to the UK ’s Thanet wind farm).
Installing offshore wind turbines and their foundations requires specialised ships with special equipment on board. A2SEA now has four such vessels which can transport and lift the enormous construction into place under often difficult conditions at sea. The so-called jack-up vessels are equipped with lifting cranes and extendable ’legs’ that can reach down to the sea bed and hold the ship completely steady during installation work.
“We fetch the wind turbines and foundations from the port, ship them out to the site and install them. It is a complicated process that demands meticulous planning by experts and is only feasible under certain wind and weather conditions,” says Jens Frederik Hansen, managing director of A2SEA.
Many of the company’s 220 employees are land-based and work on project preparation.
The specialist shipping company was established 10 years ago, and after a somewhat sluggish start the interest in offshore wind farms has led to explosive growth for A2SEA. Revenues over the last four years have risen by over 680 percent, and today the shipping company has 60 percent of the world market for installing offshore wind turbines.
In recent years the market has been concentrated around Northern Europe, where growth continues, but now other parts of the world are opening their eyes to the benefits of offshore wind farms. A2SEA thus expects strong growth in the coming years while its market share will probably fall gradually as other players enter the market.
“The market is growing and there will be very large projects under way from 2012 onwards. Competition will become tougher and more diversified going forwards, but we have a head start thanks to the expertise we have built up over the last 10 years. We will continue to grow significantly and have a sizeable market share – albeit in a much larger market,” says Jens Frederik Hansen.
A new and larger ship
In response to increasing demand, A2SEA has recently ordered a new ship from a Chinese shipyard with expected delivery in 2012. The new ship, which is significantly larger than the existing quartet, can carry up to 10 large wind turbines and operate in water depths of up to 45 metres. This makes the ship suitable for some of A2SEA’s upcoming tasks in the UK , where a number of large offshore wind farms will be built.
”One of the big challenges going forward will be to reduce the time it takes to install the wind turbines, in order to ensure even better project profitability. With the new ship we will be ready to meet future customer needs and maintain our market leadership,” says Jens Frederik Hansen, who can well see A2SEA investing in even more ships.
”The expansion of offshore wind farms planned in Germany, UK and Denmark will by itself require 10-15 new vessels for the industry within the next three years,” he says.
DONG Energy and Siemens partners in A2SEA
Since 2009, A2SE A has been owned by the Danish energy company DONG Energy, which is the market leader in offshore wind power and operates a number of large offshore wind farms in Northern Europe. Under a new agreement Siemens, which has considerable interests in the wind industry, will over this year and next year acquire a 49 percent stakeholding in the company. Siemens’ goal is to advance the industrialization of offshore wind power.
A question of constant care
It began with a small shipping company in a provincial Danish coastal town at the turn of the last century. Today, Maersk Line is the world’s largest container shipping company, and is itself only one part of the giant A.P. Moller-Maersk Group. The original values still guide this modern, global concern
By Jan Aagaard
Maersk Mc-Kinney Møller stepped down as chairman of A. P. Møller in 2003 at the age of 90. Seven years later, he is still active in Danish corporate and cultural life.
There is hardly anywhere in the world where one doesn’t encounter the sevenpointed star on a sky blue background. The logo symbolises Maersk Line, the world’s largest container shipping company with over 500 ships and more than 1.9 million containers.
Every day, hundreds of thousands of Maersk containers filled with goods of every kind are in transit across oceans and continents. From the remotest recesses of Africa and Asia to the busiest motorways and ports in Europe and the US , one can find the seven-pointed star on a sky blue background.
And Maersk Line is just one part of the giant A.P. Moller-Maersk Group, that comprises a number of companies with activities in shipping, energy and related areas. This great diversity is one of the group’s strengths, and helps increase its competitiveness. The broad span of A.P. Moller-Maersk’s activities include logistics, supply chain management, port operation and container transport, as well as the extraction, transport and trading of oil and gas.
Collectively, the group’s companies have activities in 130 countries and employ around 115,000 people. On business magazine Fortune’s list of the world’s 500 largest companies measured by turnover, the Maersk concern was ranked 147th in 2010, ahead of companies like Renault, GlaxoSmithKline, Bayer and PepsiCo.
Raising money door to door
In 1904, when founder A.P. Møller and his father tramped from door to door in the provincial coastal town of Svendborg to rally support and raise capital to establish a small shipping company, he could hardly have dreamed that one day the company would be one of the world’s biggest – and by far Denmark’s largest.
The son of a sea captain from a timehonoured family of seafaring folk, Arnold Peter Møller was born with a seaman’s blood in his veins. He didn’t go to sea however, but after a business education abroad he worked in the shipping industry in the UK and Russia. He returned to Denmark some years later to realise together with his father the ambition of a family firm in Svendborg, which at that time was one of Denmark’s leading seafaring towns.
The local business community backed the venture, and the newly established shipping company started by purchasing a second-hand steamship. Over the following years, the fleet grew steadily. But A.P. Møller wanted things to go faster, so in 1912 he founded another shipping company, where he had greater freedom of action but also greater economic risk.
Progress was rapidly made. In 1928 the company was expanded with a tanker division of five ships, and the same year the first step towards a shipping line was taken when an agreement was entered with the Ford Motor Company in the US and the first car parts were shipped from Baltimore to the Far East.
By 1939, A.P. Moller-Maersk already controlled a fifth of Denmark’s merchant fleet, the expansion being based almost exclusively on ships built in its own shipyard in Odense. The company continued its expansion after World War II, and in the mid 1970s came the first fully containerised ships, together with massive investment in port terminals and containers. In the 1970s and 1980s, the concern’s activities were broadened to include oil and gas extraction.
Mammoth container ships
In the 1980s the company built giant container ships with the capacity to carry 1,800 containers, for the routes between Europe and Asia. Since then, the ships have become bigger with every passing decade.
In the mid 1990s Maersk Line twice set the world record in container ship size with vessels that could carry 6,000 and 6,600 containers, but today the company’s largest vessels – the E Class ships which are the world’s biggest container ships – can accommodate more than twice as many containers. These ships can carry up to 14,700 TEU (Twenty Foot Equivalent – a container 20 feet long). The record is over 15,000.
The original values
The A.P. Moller-Maersk family business has always been imbued with a special spirit. Even with its current global spread and modern management and organisation, the company continues to set great store by its original values.
One of the group’s core values was first expressed in a letter that the shipping company’s founder wrote to his son Mærsk Mc-Kinney Møller in 1946: “My old saying, that no loss should befall us that cannot be prevented by constant care, should be a motto which permeates the entire organisation,” wrote Arnold Peter Møller.
The concept of ’constant care’ still characterises the company, and can be seen as an essential part of its success. In more recent times, other values have appeared such as consideration for the environment and climate, which plays an increasingly important role for the companies in the group.
Mærsk Mc-Kinney Møller took over at the helm when A.P. Møller died in 1965 and served as the general manager up to 1993. Thereafter he continued as chairman of the board until 2003, when he stepped down at the age of 90.
Despite his advanced age, Mærsk Mc-Kinney Møller still makes appearances at the company’s headquarters on the waterfront in Copenhagen and attends many high-level official arrangements in Danish corporate and cultural life, while continuing to enjoy his sailing hobby. One of his most recent purchases was an 82 foot Nautor’s Swan, and if you are lucky you can see the 97-year-old Mærsk Mc-Kinney Møller at the helm as the proud ship crests the waves in the Danish waters where the story first began.
A.P. Moller-Maersk around the world
The A.P. Moller-Maersk Group comprises a wide range of companies in the shipping, container transport, port operation, oil extraction, offshore service, retail trade and aviation sectors. The main companies include:
Maersk Line: The largest container shipping company in the world with a fleet comprising more than 500 vessels and 1,900,000 TEU (Twenty Foot Equivalent Unit – a container 20 feet long). Some of the important Maersk Line routes are:
Transpacific: Departing from Los Angeles, the vessels carry huge quantities of American goods to Japan, China and Malaysia – and return filled with Asian products bound for North America.
Asia-Europe: Emma Mærsk and her sister ships are among the largest ocean-going vessels in the world today. Emma Mærsk operates on the Asia-Europe route from China via Oman to Northern Europe.
Transatlantic: Vessels on this important route depart (westbound) from Rotterdam and sail to Newark before making their way south to Miami, Houston and Mobile.
South America-Europe: Linking Spain and South America, the vessels on this route often carry fruit in reefer containers from Buenos Aires, Montevideo and ports in Brazil to key Northern European ports. London, Bremerhaven and Rotterdam form the northern end of the route, before the vessels head south again to Spain.
Asia-South America: On Maersk Lines longest route, with vessels taking 79 days to complete the round trip from Asia to South America and back, high-tech gadgets are shipped alongside wine and clothing. The route links Singapore, Malaysia, Hong Kong and China to major ports in Brazil and Argentina via Durban and Port Elizabeth in South Africa.
Safmarine: Focuses primarily on container transport to and from Africa with over 40 vessels.
Damco: One of the world’s largest providers of freight forwarding and supply chain management. The company operates worldwide.
Maersk Line Ltd: US -based subsidiary which manages a fleet of US -flagged vessels engaged in commercial liner services.
MCC : An Intra-Asia carrier delivering containerised cargo through an extensive feeder network. Wholly responsible for all Intra-Asia shipping activities for the A.P. Moller - Maersk Group. MCC operates over 40 modern vessels.
Maersk Container Industry: Manufacturing containers in China, headquartered in Denmark.
APM Terminals: Develops and operates container terminals and related activities in 50 terminals in 34 countries on five continents. APM Terminals was named 2009 “Terminal Operator of the Year” at Lloyd’s Lists’ prestigious annual awards ceremony and has 7 new terminal development projects under way.
Maersk Tankers: Owns and operates a large fleet of crude oil carriers, product tankers and gas carriers, with over 225 vessels in total.
Maersk Drilling & Maersk FPSOs: A leading global operator of high-technology drilling rigs and floating production units.
Maersk Supply Service: Over 60 vessels providing towage of drilling rigs and platforms as well as supply service to the offshore industry.
Maersk LNG : Owns and operates 8 LNG (Liquefied Natural Gas) carriers.
Svitzer: With a diverse fleet of more than 500 vessels operating in more than 35 countries, Svitzer is a leading provider of marine services. Svitzer is involved in towage, salvage and offshore support.
Maersk Oil: Currently produces more than 600,000 barrels of oil per day in the Danish and British sectors of the North Sea, offshore Qatar, Algeria and Kazakhstan.
In addition, Maersk Oil participates in exploration activities in the North Sea (Denmark, UK and Norway), North Africa (Algeria), West Africa (Angola), the Middle East (Qatar and Oman), Brazil and the US Gulf of Mexico.
Dansk Supermarked Group: Incorporates hypermarkets, quality supermarkets, department stores and discount supermarkets located in Denmark, Germany, Poland and Sweden.
Star Air: 11 Boeing 767 cargo aircraft, primarily engaged in long-term contract flying for United Parcel Service (UPS) in Europe.
This page forms part of the publication 'Focus Danmark December 2010' as chapter 5 of 9
Version 1.0. 09-12-2010
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