2017 has been a year of considerable and rapid change for A.P. Moller - Maersk, as we have progressed on the execution of our new strategy: finding future solutions for our energy businesses, integrating and transforming the transport and logistics business and strengthening the governance.
A transformation that will not only change A.P. Moller - Maersk, but the entire industry.
The future focus is to deliver best-in-class services within container shipping, ports and logistics, as an integrated company with expanded coverage of the whole value chain. By offering a wider range of logistics services, as well as products not related to sea transport, we will deliver more value to our customers, seek growth, increased earnings, and reduced volatility of our business.
It has always been and remains an integral part of our purpose to safeguard the long-term viability of our companies by investing in and building value-creating businesses that have a positive impact on society. This has been a guiding principle in our strategic change, as well as in our work to define viable solutions for our oil and oil-related businesses.
Future growth will be based on organic growth in the individual transport and logistics businesses combined with targeted acquisitions, and in December 2017, we welcomed Hamburg Süd to the Maersk family in a significant strengthening of our customer offering and container line presence.
This meant new beginnings for our transport, logistics and ports businesses in defining the future of A.P. Moller - Maersk as well as new structural solutions for our oil and oil-related businesses, which have been an integral part of our company identity for decades.
Finding future solutions for our energy businesses
We set out to have defined new structural solutions for all the oil and oil-related businesses before the end of 2018. Already in 2017, this resulted in not only defining, but also executing on solutions for two of our oldest and most iconic energy businesses; the sales of Maersk Oil and Maersk Tankers.
On 21 August 2017, we entered into an agreement to sell Maersk Oil to Total S.A. for USD 7.45 billion in a combined share and debt transaction. Maersk Oil will become part of the world’s fourth largest oil and gas company, which has a strong performance record and long-term growth and investment interest in the oil and gas sector. Denmark will become the regional hub for Total’s activities in Denmark, Norway and the Netherlands, a testament to Maersk Oil’s capabilities and position and ensuring a continued Danish stronghold in the North Sea. The transaction is progressing as planned and we expect to close during Q1 2018, pending regulatory approvals.
Furthermore, we sold Maersk Tankers to APMH Invest, a subsidiary of A.P. Moller Holding, for USD 1.171 billion in an all-cash transaction, which closed 10 October 2017. In determining the future ownership for Maersk Tankers, it was imperative to ensure a financially solid owner with industry insight and a long-term view on the inherent cyclical nature of the tanker industry. This to ensure that Maersk Tankers can continue to take advantage of market opportunities, while upholding the capabilities and the organisation on which its strong name and global leading market position are built.
Over the last six months, we have seen signs of improved market conditions in the offshore drilling industry. This has, amongst other elements, raised our confidence in finding structural solutions for Maersk Drilling and Maersk Supply Service before the end of 2018. Maersk Drilling was reclassified as discontinued operations in the third quarter financial statement, and Maersk Supply Service in the fourth quarter financial statement.
I would like to take this opportunity to extend my sincere gratitude to all our employees in the oil and oil-related businesses for their continued passion, efforts and dedication during the separation process.
Transforming the transport and logistics industry by reducing complexity
The digital revolution has fundamentally impacted behaviours and trade patterns over the last 5-10 years, making its marks on many industries. However, the transportation and logistics industry has not yet undergone any significant transformation.
There are many reasons for this; the most important being the complexity of container shipping, the lack of standardisation, and ability to adjust to multiple unforeseen events in the handling process, as the underlying processes in shipping remain largely manual, paper-based and typically with little standardisation between different countries and authorities.
We ship close to one out of five containers and one of four reefer containers globally, corresponding to approximately 13 million forty foot containers annually. For each container shipped, there may be up to 30 different parties involved, communicating up to 200 times. Although we have seen some development over the last decade, the basic shipping experience is virtually unchanged seen from a customer’s point of view.
We want to transform the industry by reducing the complexity. We believe it should be as easy for our customers to ship a container as it is to send a parcel with a postal carrier.
Based on our leading position within container shipping, port activities, supply chain management and freight forwarding, we want to improve and simplify the shipping experience by utilising and integrating our c apabilities across the value chain. This enables us to offer seamless value-adding end-to-end services to our customers based on digital, innovative customer solutions, extending the industry’s most effective and efficient delivery network to every market in the world.