War chest or aquisitions?

The AP Moller-Maersk Group’s recent moves to sell more than US$4bn of non-core and under-performing assets begs the question of where the money will be re-invested, and its likely impact on existing market forces within the container shipping industry. Maersk Line already enjoys enormous economies of scale within the sector, so, should the cash be ploughed back into providing even more competitive services, its cash strapped adversaries will be quaking in their boots.

Although Maersk Oil is currently the most profitable part of the A P Moller-Maersk Group, APM Terminals and Maersk Line are also likely to be big recipients of the cash generated by its recent sale of non-core assets. The former because of its profitability and the latter to protect its dominant market position within the liner industry. Maersk Line also accounts for around half of APM Terminal’s volumes.

APM Terminals, the Group’s container terminal business, provides a good profit margin and one of the best Return on Invested Capital (ROIC) in the group so the money it will receive is only natural.