A lot has been written over the past few days about the real value of brands in a highly commoditized industry such as ocean transportation, after the latest decision by the Maersk Group to integrate Africa centric liner Safmarine, acquired in 1999 and Logistics operator Damco, part of the Maersk portfolio since 2006. These decisions come amid structural changes in the shipping industry, that can be best described as:
- A fierce M&A trend that has completed changed the landscape of the top 20 shipping lines over the past decade.
- Similar brand scrapping moves by Maersk (MCC and Seago Line in 2018), CMA CGM (APL in 2020), Hapag Lloyd (with UASC in 2017 and CSAV in 2014) and the formation of ONE from the integration of K Line, MOL and NYK in 2018.
These rapid changes have led to a few head scratches. You can almost write the messaging from the top of your head:
“We’re doing this to better serve our customers…”
“By better integrating…”
“Leveraging our (regional/global) footprint…”
Leaving these looming questions unanswered: do brands really matter in transportation? Is there value in having a brand portfolio instead of a monolithic brand?
While I cannot speak to the efforts made by CMA, ONE or Hapag Lloyd to try to integrate these peripheral brands into their book of business, I was deeply invested in the development of Sealand as an intra-Americas brand for the Maersk Group from 2014 to 2020. Based on this, the answers are simply put yes, and maybe, if done right.
Yes, brands do matter in transportation just like they do in every aspect of modern society. But we must remember that brands exist as means of differentiation. The value of a brand is only placed by customers that trust its value proposition and agree not only to acquire their products/services but to operate under their terms, conditions, and service practices.
First and foremost, a brand can only survive behind the value proposition, pricing strategy and service level it supports. This is an extremely important distinction to make in an inherently complex industry plagued by inconsistently enforced contracts, recurrent price fluctuations, below average reliability, archaic technologies and where delays, errors, omissions are not rare exceptions but a common occurrence in the daily interchanges of thousands of players and intermediaries keeping global supply chains moving.
Rachel Botsman, a scholar and expert in the subject of trust in modern institutions wrote on her 2017 book “Who Can You Trust?” the following: “Issues of accountability are incredibly complex in an age when platforms offer branded services without owning any assets or employing the providers”. In the case of transportation and logistics, the players are intricately linked to an asset driven business.
As an end user, a bad customer experience doesn’t necessarily translate into a brand, but the service provider. A stinky ridesharing ride is usually blamed on the driver, not the app. But when a container gets delayed, damaged, or rolled, customers focus all their energy in fighting the carrier to right their wrong. And when historically shipping lines operate in an environment when 1/4 containers fail to meet their planned scheduled, the available alternatives are few and far fetched.
It is in this landscape that the opportunity to launch a brand as an intra-Americas specialist materialized in 2014. The intra-regional markets had historically been highly fragmented on the supply side, with smaller niche players, yet lacking the scale and financial backing of global players that had tip-toed their presence in the Americas trades. In terms of demand, the marketplace lacked the concentration seen in other latitudes (e.g. transatlantic and transpacific), where large OEM’s, retailers and other mass producers representing a large piece of the pie and exercising their influence in the process of transporting goods. The Americas was a market full of smaller players, thriving under the commodities boom and with unique conditions that changed country to country. This was a perfect environment for a player to come in and differentiate itself as an alternative to existing providers while speaking to the smaller customer, a self-evident condition for anyone familiarized with the trade, yet scarcely tackled by a few players throughout the years.
On the basis of this diagnosis a team set out to launch a company with residual brand recognition to be a conversation starter (Sealand, the company that created the category in 1956, acquired by Maersk in 1999 and shelved in 2005 after the P&O integration), yet with a message that was different from anything else in the marketplace: focusing on people and products, their impact of their work to the livelihood of the communities it served, instead of showcasing assets such as vessels cranes porch containers.
When this brand was launched (or technically, relaunched) it lived as a brand with a purpose, with the idea of empowering small and medium size shippers in the Americas and enabling them to transact, move their goods across the region in a seamless way, an idea that was not being done by any other carrier in the region. That purpose was driven internally through empowerment and the freedom of navigating less layers to a decision with commercial implications and operational feasibility, with an independent spirit yet also facilitated by a standardized structure of processes, procedures, and the ability to tap into the core strengths of a global behemoth. It was summarized in the tagline Vamos Juntos!, Spanish for we go together, evoking an inclusive brand that listened and interacted openly with customers across the region, in their language and in a simple yet effective way to generate empathy and understanding, aspirations like no other in the region.
Externally the results are visible today. A growing presence in the Americas, that was scaled to Asia and Europe in 2018 when Maersk shelved MCC and Seago, and that survived the recent exercise that brought an end to Safmarine and Damco. Why, you may ask yourself? Because the customers recognize the brand, understand the value proposition and appreciate the benefits of it, empathize with what the brand and the company behind it are trying to accomplish, see the improvements in service (+50 increase in NPS scores over the past years) and most importantly, trust it with their business.
So the principle of a differentiated brand or brand portfolio in transportation has to be tied up to a very basic concept: how much effort are you willing to put on a brand or group of brands to differentiate yourself in each and every market where it operates. Choosing a brand today, in an era of Choice is an exercise in association with more than the brand colors, logo, tagline or visual identity, copy guidelines, tone of voice, spokespersons or the mediums it decides to interact with. It is an exercise in choosing a culture that in the case of B2B transportation, supports your business.
If brands don’t even live up to the purpose they were created for in the first place, they shed value every day, with every late port call, missed delivery ETA, lost phone call or unanswered email. With every minute lost trying to do business with them. With every lost expectation. Because in the eyes of the end customers, once all those things are lost, a box is just a box. Once that is the case, then they barely become an accounting line that eventually meets its bookkeeping end of existence.
What we are seeing in the shipping markets today is the correction of brand proliferations without a purpose, differentiation that was only geographic in nature but that lacked the underlying conditions to truly transcend in the eye of customers.
The opportunity for transport companies reading this is simple: Do not deliver a product. Deliver an experience. Start with a clearly defined purpose. Instill it in your brand and the people behind it. Execute that brand purpose consistently and see your brand thrive.
Will this trend continue down the road? Customers will gravitate towards brands where they see value in their transactions, and companies will continue to revisit their portfolios, liquidating those where brand value tends to zero and elevating those that stand out. Only time and brand purpose will tell.
Ariel Frias worked in Marketing, Brand, Communications and Digital in the Transportation industry. He co-authored the relaunch of Sealand. You can find some of his work https://ducoudray.myportfolio.com/