International Business

SeaLand: A famous name returns to the seas

The 8,650 TEU Clementine Maersk arrives at PortMiami. The ship was not fully loaded when it called in Miami on March 18, 2014.
The 8,650 TEU Clementine Maersk arrives at PortMiami. The ship was not fully loaded when it called in Miami on March 18, 2014. Maersk

SeaLand, a company that helped pioneer containerized cargo, has a long history in the Americas, and that made its relaunch in January much easier.

It had its roots in the 1950s and began doing business as Sea-Land Service in April 1960. After Copenhagen-based Maersk Line’s parent A.P. Moller-Maersk Group acquired the company in 1999, it was called Maersk SeaLand until 2005, when the SeaLand name was retired.

“We decided to go back to just Maersk Line,” said Soren Skou, chief executive of Maersk Line during a recent visit to South Florida. But as the giant shipping line looked at its intra-Americas trade, he said, “We realized we were not doing a fantastic job for our customers. We were not able to focus enough.”

Maersk’s primary interest is trans-oceanic trade, and it has almost completed taking order on 20 18,000-TEU ships, behemoths that are four times as large as the ships that currently transit the Panama Canal and are being used in Asia and Europe. The canal is expanding so it can accommodate ships that carry 13,000 TEUs — the equivalent of 13,000 standard 20-foot containers.

Most of the trade around the Americas involves far smaller ships with short transit times that may require same-day responses to queries — something that’s difficult when company headquarters is in another time zone with a time difference of six to 10 hours.

While the focus of Maersk’s trans-oceanic trade is very large customers — such as global manufacturer China International Marine Containers — most of the customers in the Americas are smaller shippers served by smaller vessels.

“We decided to carve out a company based solely on Latin American and Caribbean trade,” Skou said. “We knew we had to be more nimble in the region.”

So on Jan. 1, Maersk spun off its intra-Americas trade into a separate company, resurrected the historic SeaLand name, and began running the shipping line from a new headquarters in Miramar.

“Maersk conjures up images of huge ships, huge customers and hundreds of thousands of containers, so separating the intraregional trade from Maersk Line makes perfect sense. It gives it better focus,” said Richard Wainio, a maritime consultant and former director of the Port of Tampa. “You need flexibility on routes where you’re serving smaller customers.”

Maersk has already found success with the model of smaller regional carriers with its Seago Line in Europe and MCC in Asia.

The new SeaLand also has refrigerated vessels in its fleet that will help meet U.S. consumer demand for year-round fresh produce from South American and Caribbean markets, said Maersk officials.

Because SeaLand isn’t exactly a new kid on the block, the SeaLand name gives him instant entrée when visiting potential clients around the region, said Craig Mygatt, chief executive of the company.

“The SeaLand name resonates with the whole Caribbean area,” Mygatt said. “When you say you’re from SeaLand, everyone knows who you are.”

That’s especially true for people who have been in the maritime industry for some time.

“At one time time, SeaLand was a leader in the industry. Much of what we do in the industry today, we owe to SeaLand,” Wainio said. Although SeaLand hasn’t operated any ships for several years, he said, “the name hasn’t really faded.”

And that’s a good thing for Maersk, which hopes to rebuild its Americas trade with the SeaLand relaunch.

While Maersk, the world’s largest container shipping line, accounts for 15 percent of the containerized market globally, its market share in the Americas is only about 6.5 percent. “Clearly we are underweight,” Skou said.

SeaLand, which has 240 employees, advertises itself as “bringing personal connection to the Americas.” “No customer is too small, every box matters” is the way SeaLand is trying to sell its customer-focused approach.

Maersk Line is currently the No. 2 shipping company at PortMiami, which is dredging its channel so it can handle the big ships that will traverse the Panama Canal when the expanded waterway opens to commercial traffic in early 2016. Once that happens, Skou said, the Panama Canal “will be quite competitive with the Suez Canal,” which can already handle megaships.

In 2013, Maersk stopped using the Panama Canal for two routes that went from Asia to U.S. East Coast ports — although many of its other itineraries still take it through the canal. It opted instead to consolidate those two Asian routes on one ship transiting the Suez Canal. The decision was simple economics, Skou said.

Still, he said Maersk has and will continue to have a “strong relationship” with the Panama Canal. When the expansion is complete, he said, “the Panama Canal will be quite competitive with Suez, slightly faster, especially from North Asia to U.S. East Coast ports.”

Does that mean Maersk will restore that Asia-U.S. East Coast route after the expansion?

“At the end of the day, what will determine what we do is economics. It depends a lot on the tariff structure the Panama Canal decides on,” Skou said. The new tariff schedule for the expansion is still being negotiated.

PortMiami is betting that as the closest U.S. East Coast deep-water port to Panama, it will be a big beneficiary of the canal expansion. Miami hopes to be first port-of-call for ships that have transited the canal.

For Juan Kuryla, the Miami port director, the equation for going after post-Panamax traffic is “the bigger the ships, the more cargo, the more jobs.”

Now, many products destined for South Florida arrive in Savannah where retailers such as Kohl’s, Home Depot and Walmart have huge distribution centers and then move south by truck or rail. Kuryla wants to win that Florida-bound traffic back from Savannah. However, PortMiami’s location, down at the tip of a peninsula and far from other East Coast and Midwest population centers, means cargo unloaded in Miami that isn’t destined for the local market will have to move by train or rail to its final destination.

But Skou pointed out: “Sea freight is by far the cheapest, most economical way to move goods.”

Other Florida ports, including Port Everglades and Jacksonville, would like to dredge but lack final approvals, so in that respect, Miami is ahead of the pack. “At this point for customers whose cargo terminates in the state of Florida, Miami is the preference,” Mygatt said. But he said Miami’s hope to win some cargo headed to southern Georgia may not be realistic: “It will be difficult to convert a Georgia-based customer from Savannah to Miami,” he said. “It’s really important for the state of Florida and Florida ports to get close to their customers.”

Kuryla said PortMiami is trying to do just that with an aggressive marketing campaign this year.

As part of its plan to capture more cargo after the canal expansion is completed, PortMiami wants to attract more trans-shipment business, bringing in large ships to unload a portion of their cargo that would be sent on to smaller markets in Latin America and the Caribbean.

About 25 percent of PortMiami’s traffic was trans-shipment at one point, but the business eroded because of more stringent inspections after 9/11 caused delays and raised the cost of shipping through U.S. ports. Caribbean ports such as Freeport and Kingston and ports in Panama itself have picked up the slack.

Miami has regained a small portion of its trans-shipment business and it would like more. So would several other ports in the Americas that have deep-water or are in the process of getting it.

“It’s hard to imagine a U.S. port becoming a major trans-shipment port,” Skou said. “Those new ports will have stiff competition too. It’s not easy.”

“What drives the attractiveness of a trans-shipment hub are really three things. Location, location, location is very helpful,” he said, “but so is productivity — a stable labor force and getting ships in and out as quickly as possible. And then getting costs as low as possible will drive carrier behavior.”

“Productivity is a big issue at PortMiami. They need to improve,” Mygatt said.

But Kuryla said that “in terms of productivity we do well. Of course, we can always improve.” He said once the port is able to receive big ships that will be loaded and unloaded with post-Panamax cranes, its productivity should improve even more.

Asked about Nicaragua’s plans to build a canal even bigger than the Panama waterway, Skou responded, “As a global carrier, we always have a positive view on investment in infrastructure that supports our industry. If it gets built, we will have a choice.”


Business: Shipping line providing service to all major ports in North, Central and South America and the Caribbean. Also provides intermodal service across 14 countries. SeaLand operates 25 smaller vessels on its intra-Americas routes and also collaborates with Maersk Line and other carriers.

Headquarters: Miramar

Owner: A spinoff from Maersk Line, the world’s largest container shipping line.

History: Sea-Land Service was founded in 1960 by Malcom McLean, a trucking entrepreneur who found they could be significant cost savings if goods were packed in uniform containers easily handled by truck and ships. That’s containerization. Sea-Land Service underwent a few ownership changes before Maersk acquired the Sea-Land name and container shipping portion of the business in 1999.

Relaunched: Jan. 1.

Net earnings (2014) for parent A.P. Moller-Maersk: $5.19 billion.

Employees: 240 around the Americas.

Slogan: Vamos Juntos — SeaLand goes with you.


Sources: SeaLand, Maersk and Miami Herald Staff