Don't rock the boat

How do you merge a successful business with your own without harming what made it successful? Positive results from APM Terminals’ integration of Grup Maritim TCB point to a light touch approach.

dont-rock-the-boat

APM Terminals’ acquisition of eight terminals from Grup Maritim TCB was completed in early 2016. Compared to 2015, performance improved significantly in these terminals.

  • 25% Total revenue increase
  • 7% Segment result increase

Note: Numbers exclude one‑off costs.

For 15 years, Miguel Duro has been commercial chief of Grup Maritim TCB and its 11 ports. So when news came through that APM Terminals was to acquire TCB, he was naturally concerned.

As one of two commercial leaders for TCB – in stark contrast to over 30 in APM Terminals – the scale of the task was daunting.

“We are a small company,” says Duro, who is now Sales and Marketing Director for APM Terminals Barcelona. “And as a small company, we’ve built the business entirely from developing close relationships with our customers.”

As buyer, APM Terminals shared his concerns, so over the last 12 months it has shaped an integration process that prioritises keeping those customer relationships and the people that built them.

“We bought a great business with a reputation for commercial and technical excellence,” says Martijn Van Dongen, appointed CEO of TCB in June after leading the integration process. “So how do we keep that magic but also make it work and thrive within APM Terminals? Well, partly, by just letting it run.”

1-2-3 Pull!

Successful integration is about sharing responsibility for the development of the new organisation – a sentiment Van Dongen wanted understood from day one.

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Miguel Duro (left) and Martijn Van Dongen say there have been challenges in the integration, but dedication to the task has helped make it a success.

Teams were set up spanning every functional area of the business, composed of leaders from both companies. From HR and Commercial to IT and Finance, each team was given two weeks to agree on a plan on how they could work together and get their functions up and running – while also tending to day-to-day business.

“All these people effectively had two jobs – their regular one and their integration tasks,” says Renata Moruzzi, Head of the integration’s HR workstream.

“Communication and cooperation, that’s what a process like this requires. We all had one goal – to get back to business as usual. Every function had to come together as a team to make that happen.”

We’re different, and that’s good

Along the way, several early sessions helped both companies air concerns and also offer positive observations about each other. Martijn Van Dongen says these “culture sessions” helped both companies realise something important: that each organisation had attributes that could improve the other.

“TCB has the customer relationships and a personal touch that they have developed. They also tend to take more time to make important decisions, whereas APM Terminals tend to want to move more quickly and are more data driven in our business. So it’s a good combination, actually. We strengthen each other,” says Van Dongen.

An exchange programme that will send APM Terminals managers to TCB terminal sites and vice versa aims to take advantage of those differences and increase learning across the two organisations.

Despite setbacks, success

Nearly one year has passed since the integration process began and from his office in Barcelona harbour, Miguel Duro has as good a perspective as anyone on the progress and success of the integration.

“A lot has changed, but a lot has also stayed the same – thankfully,” he says, referring to the realities of change but also his customer base, which has not only stayed but expanded with the addition of new Maersk Line and Seago Line volumes. “If they didn’t trust us, they would leave. So I’m proud to say the business has only grown.”

For Martijn Van Dongen, the one year mark is bittersweet. He says that the success of the integration and the performance of the business throughout is a tribute to the dedication, hard work and loyalty of the people involved from both companies, but it hasn’t come easily or without tough challenges. In April, just a month after closing the deal, there was a fatality in the Barcelona terminal. Days later, corruption charges were brought against the company for preacquisition activities related to the Guatemala terminal.

“A loss of life and a blow to our integrity right at the start has been hard on everyone,” says Van Dongen. “But we are two strong, proud companies here trying their best to operate and act together as one. We’ve come a long way in our first year together, and we’re only going to improve.”

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Pending regulatory approval, Hamburg Süd will join the A.P. Moller - Maersk family as a separate carrier with its name and organisational structure intact – an acknowledgment of the brand’s strong reputation and the business it has built.

Strength in a name

Maersk Line reached an agreement on 1 December 2016 to acquire Hamburg Süd, the German container shipping line. Hamburg Süd is the world’s seventh largest container shipping line and a leader in the North-South trades.

The acquisition is subject to final agreement expected in the first half of 2017 and to regulatory approvals. The transaction is expected to be completed by end 2017.

It brings more than volume and revenue to A.P. Moller - Maersk, and this is reflected in the terms of the deal.

“Hamburg Süd is a very well-run company and a highly respected carrier – with strong brands, dedicated employees, an attractive fleet and a good client base,” says Søren Toft, Chief Operating Officer, Maersk Line.

“Preserving this, including the support of its many customers, is essential. Therefore, Hamburg Süd will continue as a separate brand. We will maintain both the head office in Hamburg and the regional Commercial and Operations structure.”

The acquisition gives Maersk Line 26% additional revenue and a much stronger leadership position in container shipping, increasing its global market share by 3% to 18%, specifically adding nearly 17% in Latin and Intra-America trade.

The German carrier’s strong customer base in Latin America and Oceania strengthens the combined network’s presence in these areas, particularly regarding reefer cargo, and creates a dual-brand platform similar to Safmarine and Maersk Line in Africa with which to serve customers.

As a result of the deal, customers will see the products menu grow, with more weekly sailings, lower transit times and more direct port-to-port options, as well as new services. If regulators approve the deal, Hamburg Süd’s operations under the Maersk Line umbrella will begin in late 2017.

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