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University of Experience

A Maersk COVID Story

Enrique Aboitiz Mendieta

2021

A Maersk Line Covid Story



Founded by Arnold Peter Moeller in 1904
The greatest shipping company in the world
An Infinite Game player

Dear All!

May I invite you to read this real-life story of what happened at Maersk Line, the greatest shipping company in the world today, during COVID. They carry 20% of the world's container trade which carries 90% of world trade with their 730 container ships.

I have known and admired this company since I can remember. They were represented by Tabacalera since before World War II. And now, she comes up again in a wonderful story that can teach us for what we must all come out of St. Covid's visit is more lessons than usual over a short period of time. Lessons, most importantly, of human nature and of those that always step up in life to save us.

So I paraphrase...

They are completely dependent on this increasingly connected world. They faced a crisis for the security of the whole world. They have a low-margin business where you have to be skilled to earn a few percentage points in a market that reaches all the way to the horizon.

Maersk operates in so many places on the planet that crises are the rule rather than the exception. Maersk was one step ahead. They formed a "war committee." They had to solve tasks that had nothing to do with shipping. Our society would collapse without Maersk. Maersk is insanely good at adapting. Maersk is extremely good at dealing with crises.

On one hand, you have people who are really exhausted, who can't go further, who do not want any more, who just have to go home.

On the other hand, you have this ship which just has to keep this supply chain.

For better and for smarter!

Mabuhay!

Endika




MAERSK COVID STORY

When the crisis broke out, Maersk was hit by a realization. Globalization is more fragile than any of us thought. It was up to the newest member of the executive team to move ships and sailors around in a world that was frozen solid.

ONE SPRING DAY IN 2020, IN THE SEA off Dubai, the 42-year old captain Jens Boysen found himself in a nerve-wracking situation. Two of the sailors on his ship, Emma Maersk, had developed painful molar inflammations. They could not get help from a dentist because the coronavirus's first wave was hitting and all ports in the region refused to assist. The alternative — to sail two and a half weeks to Europe with intense toothache — would be torture.

So now Jens Boysen was holding his colleague on a metal bench, while a helper from land, who had tried it before, grabbed a device that in Jens' eyes looked like something in between a pair of pliers and a screwdriver. Outside the door, the other sailor was waiting. The captain hoped in his quiet mind that the first one could avoid screaming.

He had the pliers in his hand and I held on. And then it was out with those teeth. It sounds a bit exciting, but I must say that you do not do it with great joy. It hurts oneself, even when one knows that under normal circumstances one would have had the opportunity to save the teeth.

The dental work was only one of Jens Boysen's many ailments. Weeks before, he was running out of food — there was only "frozen meat and chocolate sauce" on board, as he says. The restrictions made it impossible to stock up in the Chinese port of Ningbo, so 400-meter-long Emma Maersk had to change course and sail a few hundred kilometers to Gwangyang in South Korea, where a boat came out with food. That was at the last minute. A few days later, South Korea shut down just as hard as China.

They could not get help from a dentist because the coronavirus's first wave was hitting and all ports in the region refused to assist. The alternative — to sail two and a half weeks to Europe with intense toothache — would be torture.

Crisis stories such as Jens Boysen's ran through Maersk's organization in the early spring of 2020. It was around this time that Denmark's largest company changed course. There was something that no longer worked, and Maersk's top management was no longer in doubt that the seafarers' untreated toothaches and other health problems were a symptom of a far greater challenge.

A FEW MONTHS LATER, I sit in a video call with the member of Maersk's Group Management, who has had the challenge of her life in solving the biggest of the countless problems that the corona crisis created for the company. After a number of years in managerial positions abroad, Henriette Hallberg Thygesen received the title of Executive Vice President in December 2019 with the area of responsibility "Fleet & Strategic Brands", which in short means that she is in charge of most of Maersk's operations, including 12,600 seafarers, 730 ships, and everything that goes on at sea.

Henriette Hallberg Thygesen begins by apologizing. "We have such a strange half-English language here in the house, we just have to clean it up a bit afterwards. It is not acceptable that we sound like Brigitte Nielsen, just landing after her marriage to Sylvester Stallone."

Although she is at the top of the Danish business community as only the second female member of Maersk's top management ever — and the most highly educated by the way — Henriette Hallberg Thygesen has rarely given major interviews. It suits her well, I know. Slightly atypical of a business leader at her level, she likes to stay out of the spotlight. For a little more than a year, she has, among other things, been responsible for the most important personnel group in Denmark's largest company. Including captain Jens Boysen, whose debut as a dentist she followed closely, she says.

Few companies are as dependent on the connectedness of the world as Maersk. And although we rarely think about it, there are few companies we are as dependent on as the shipping giants who make sure we can get goods in the supermarket and medicine at the pharmacy. When corona came and shut the world down, it was not just a problem for Maersk. It was a crisis for the security of supply of the whole world. As a new member of the group's management, Henriette Hallberg Thygesen faced the biggest challenge of her career: transporting seafarers and containers between countries that had lost the ability to cooperate. As a company, Maersk was prepared for most things. Just with the exception that globalization could crumble under our feet.

IN DENMARK, MAERSK IS a national symbol and at the same time a punching bag; just as the company’s most important ships are too large for Danish waters, Maersk itself is almost too large for Danish consciousness. We may be proud of our hundred-year history as a maritime nation but there is something distant and strange about the fact that the story ended with a single Danish company transporting almost a fifth of all goods moved around the world.

Maersk has been the world's largest container shipping company since 1993 and thus held a leading role in world trade throughout the period when the word 'globalization' has been used in public discourse. During the period, the development has largely only gone one way. Greater economic integration across borders, more outsourcing, more far-reaching trade agreements. Easier and cheaper transport of everything from brand new cars to key rings to detergent to people. Until globalization hit a virus in 2020, of course.

Henriette Hallberg Thygesen joined Maersk's Group Management and her new role in mid-December 2019. Her appointment was one of the last pieces in Maersk's future puzzle. After years of preparation, the company now had a new management, a new structure and not least a new strategy. Maersk had made container freight the backbone of the company and was in the process of building a world-class digital and logistics platform around it. The stated goal was that Maersk should be able to move boxes, pallets and containers from one place on the globe to another with a smooth user experience. In the long run, Maersk roughly hopes to be able to offer their corporate customers the same one-click efficiency that Amazon offers consumers in large parts of the world. The challenge is complex, but the business philosophy is simple: Shipping between ports of call is a low margin business where you have to be skilled to earn a few percent on an order. More complex logistics, where goods are moved from door to door across water, land and national borders, see, there Maersk will be able to earn 20 or 30 percent on an order. On top of that, in a market that reaches all the way to the horizon.

In addition to optimizing the fleet and everything else that takes place at sea, Henriette Hallberg Thygesen was responsible for purchasing, customer service, fuel, a number of companies at the edge of the strategy — and also Maersk's much talked about attempt to become a less CO2-heavy company. Just an assignment when, like her, you had a PhD in mathematical modulation.

This is how Henriette Hallberg Thygesen thought the task looked like. She had her new job for about a month when an alarm went off at Maersk's headquarters on Copenhagen's waterfront.

"We hear quite quickly about the challenges in China," she says. "People in some of our offices have to work from home, and we also have a container factory up in Qingdao in northern China, where all employees are sent home. So a local crisis management team was set up at that time."

Maersk's Executive Vice President Henriette Hallberg Thygesen (Photo from Maersk.com)

There were only minor shakes in the organization, Henriette Hallberg Thygesen emphasizes. Maersk operates in so many places on the planet that crises are the rule rather than the exception. When a drama arises somewhere in the world — natural disasters, political unrest, piracy — there is almost always someone who must convene a meeting somewhere in Maersk. "There is a whole systematics around crisis events. Who convenes the meetings, who attends, what are the minutes for making decisions?"

But Maersk was thus early on aware of the corona crisis right up on the executive floor, even long before the Danish government. It turned out to be an advantage as February progressed and the real challenges began to emerge. At the beginning of March, the company was in full swing adapting its IT systems, redirecting its supply chains and orienting customers around the world. When the closures broke loose, Maersk was one step ahead.

"We had the experience from China of getting the organizations to work from home," says Henriette Hallberg Thygesen. She is clearly proud of the change that followed. The headquarters in Denmark set out the guidelines, and then the organization rumbled in gear. "Our global service centers are under my responsibility and are located primarily in India, China, and the Philippines. Over 10,000 people had to be transformed to work from home over an incredibly short period of time. Our IT infrastructure should be able to handle that, we should provide VPN connections and so on and so forth."

The global organization's quick transition to homework was one of the big tasks in the first hectic weeks of the now established 'war committee', says Henriette Hallberg Thygesen. The second was to ensure that the ships sailed as they should. Maersk carries about 20 percent of all container freight in the world on its 730 container ships, and if the largest of them ever sailed through the Great Belt, and you stood at their highest point, you had to duck not to get a bridge in your head. The ships are huge — but they get nowhere without a competent crew that is surprisingly small, but is all the more indispensable. Says Henriette:

"Initially, we chose to extend our seafarers' contracts to protect them and because there was so much uncertainty. Based on an expectation that the whole thing would calm down a bit and... if not be resolved, then at least be a little more clear after a few months. At the time, we thought — and everyone did — that it was something that would last two or three months."

Maersk simply assumed that the world would get together and get control of the situation. Whether it was about establishing safe flight corridors between Asia and Europe or issuing the paperwork necessary for crew members to legally sail ships that could, in theory, plow halfway through a port city.

As spring progressed, Maersk waited patiently for the panic to subside. For nations and international organizations to find solutions so that the world could operate like a cohesive normal again. For globalization to bounce back on top. That's not what happened.

At the beginning of March, the company was in full swing adapting its IT systems, redirecting its supply chains and orienting customers around the world. When the closures broke loose, Maersk was one step ahead.

MY VIDEO SCREEN IS SPLIT IN TWO. To the right is Niels Bruus, Maersk's Head of Marine HR, whom Henriette invited to the conversation. Niels has a container ship at sea as a background on his screen, he was at the helm as a ship's officer many years ago. Today, he is responsible for Maersk's 12,600 seafarers' well-being.

He clearly remembers the spring months and the decision to simply let the sailors stay on board and await decisions 'from above'.

"We make 200-300 crew-changes a week," says Niels, referring to the number of seafarers who are replaced by a colleague somewhere in the world. It should be done in a safe way, he adds; in particular, they were to ensure that the new crew did not bring corona on board. Initially, the shifts were put on standby for a month, which was then extended to two.

According to Henriette, it began to dawn on the decision-makers at HQ that the global network of connections that the virus had torn apart was not really being repaired. Maersk was waiting for solutions for which no one really took responsibility. "After a month and a half, it was clear to us that it was not sustainable. We could not keep people out on the ships. This situation would not be solved in the near future, and maybe not as many solutions would come from the system as we had expected."

Maersk changed gears. Completely. The company itself had to try to solve the “wealth of challenges” that, according to Henriette Hallberg Thygesen, were piling up.

"One is to get people back and forth, to get permission to fly, to get permission to enter countries, to get permission to disembark. But as time goes on, certificates become an issue. If you are a seafarer, then you have some certificates that need to be up to date. But if the maritime authorities in the country you come from are closed down, then you cannot get the documents, at the same time they are a requirement for you to be able to sail."

A large team from the entire organization was brought together under the leadership of Niels Bruus, and was provided with all the resources it needed. The pressure had begun to grow. The system-seizure meant that the queue of sailors stuck on the ships grew week by week, and the first stories of untreated illnesses and missed funerals had begun to emerge.

Niels Bruus (Photo from Twitter @niels_bruus)

Maersk was in the middle of a strategic alignment with focus on core businesses. Now the organization had to prove that it could figure out the exact opposite, that they could solve tasks in areas that had nothing to do with shipping. Within a few months, Maersk established a travel agency, a hotel chain, a health agency and, most importantly, a diplomacy directed from Copenhagen with threads all over the world. "Take something as simple — and which we take for granted — as that you can go to an embassy and get a travel document. It was completely impossible. We had to take ownership of all these challenges," says Niels Bruus.

Before the summer was over, Maersk had chartered five aircraft and bought all the rooms at hotels in Mumbai in India, Manila in the Philippines, and Copenhagen in Denmark, where the company also rented the entire old domestic airport terminal. The three cities became distribution centers for seafarers from up to 30 nations, says Niels Bruus. "We managed to get five planes in the air in a relatively short time — to Nigeria, Egypt, and to Copenhagen — and we managed to get over 1,000 colleagues replaced."

The challenge was then that a queue of 2,500 sailors had already formed. The collapse of bureaucracy meant that each of the thousands of seafarers had to be dealt with individually. Each individual case could involve calls to numerous authorities, from ministries to local customs officers, who were standing in a port somewhere and had no idea whether they should open a door or not. Often the seafarers had to be sent along strange routes through several countries to get home, which then triggered new problems.

According to Henriette, it began to dawn on the decision-makers at HQ that the global network of connections that the virus had torn apart was not really being repaired. Maersk was waiting for solutions for which no one really took responsibility.

"For example, you could be a seafarer from the Philippines who has to disembark from a Danish ship in Panama or somewhere else," says Henriette. "But you couldn't get a plane ticket until you had tested negative, which could not be done within the deadline. There were some of these timelines that simply did not fit together."

It was not about "emerging countries" problems, emphasizes Niels Bruus. In Europe, Schengen cooperation had been transformed into a Kafkaesque labyrinth. Seafarers usually have three days, from the landing or disembarkation in Europe to get out again — but it was often impossible due to the limited number of flights and the patchwork of new requirements for, among other things, fresh test results adopted left and right by European countries. The mere fact that a Ukrainian seafarer was sent into the queue for tourists on his last stopover could make the system go awry. Then the phone would start ringing in the Emergency Response Room in HQ, and the hunt for a decisive official in that country would begin.

"The bureaucracy of the world before COVID did not fit into a COVID world at all," says Niels Bruus, "which meant that many things became impossible. This was despite the fact that some authorities also had a very high level of understanding that one must do something here. But from there to get that understanding channeled down to some immigration officer in a specific country, it was just a huge challenge."

Like most ship officers, Niels Bruus appears as a man with a calm temperament who would rather solve problems than create them. That is probably also why the executive has invited him to join the interview. But when we get to one particular topic, one clearly senses a pent-up anger. A slight tremor creeps into his voice.

"We have had countless cases where we have had a really, really hard time getting people to the doctor," says Niels Bruus and takes a deep breath. "I am really surprised that we ended up in a situation where it was up for discussion whether one has the right to come to the doctor. I think it's shameful that we ended up there. We have had everything from colleagues with critical illness who should have been to the doctor a long time ago, to the more fundamental fact that some countries do not recognize mental illness as illnesses. It has shaken me, I would say."

ONE CAN OF COURSE OBJECT: Why should a company like Maersk get special treatment? I guess we all had problems during the crisis, right? Wipe your tears, billion-dollar business. Here we are approaching an area where Maersk had reason for a bit of introspection, says Henriette. The company has probably not been good enough at reminding communities what societal task it solves.

Why should we go into whether Maersk gets fresh engineers out to the container ships? Because our society would collapse without them. 90 percent of world trade is moved on container ships. This applies to the food on our shelves and the medicine in your pharmacy, and it applies to the countless gadgets, goods and bits and pieces that are the lifeblood of the world economy. This is what gives us, literally, something to work with. Maersk does not ask for a medal. But one notices in Henriette that a couple of their seafarers might well deserve one, trapped as they have been on a steel ship in the second year, some with sick parents at home and under a tremendous mental pressure, while they once again set course towards the Suez Canal.

"Why is it that seafarers are allowed to fly and travel in and out of countries under certain special conditions? Well, it's because they solve an absolutely essential supply task," she says. "The importance of maritime transport to put goods in the supermarket and food and medicine, it has probably been ab it forgotten and a bit invisible in recent years. It's not something I as a consumer think about, but politically there has not been that much attention either."

At the same time, Henriette acknowledges that Maersk — which has a long tradition of appearing measured in public — is probably complicit in the lack of awareness. "For hundreds of years, there has been an understanding that seafarers have certain rights," she says. That code was allowed to erode over time. "It has been a huge challenge. And that understanding we have also had to think about how we can help secure."

As 2020 progressed, Maersk began to pursue diplomacy at all levels, locally, nationally, and internationally. The crisis triggered a close collaboration between Maersk, the other shipping giants and all the shipping industry organizations. In September, Henriette was invited to speak at the UN in connection with World Maritime Day, where she went through all the bureaucratic headaches, the desire to give seafarers legal status as "essential workers" and the looming "humanitarian crisis" affecting the 300,00 seafarers stuyck at seda, whose hopeless situation, she added, "pose a significant threat to world trade and global supply chains."

A few weeks earlier, Maersk's CEO, Soren Skou, had shared the same concern in a conversation with the UN Secretary General.

Niels Bruus adds that the fact that the sailors have clenched their teeth and sailed on through illness and bureaucratic collapse may end up weakening their cause. "It has meant that we as ordinary citizens have not felt it. They continue to sail, and the paradox is that precisely because they have done so, there may not be the attention paid to the great work they have undertaken."

"The bureaucracy of the world before COVID did not fit into a COVID world at all," says Niels Bruus, "which meant that many things became impossible. This was despite the fact that some authorities also had a very high level of understanding that one must do something here. But from there to get that understanding channeled down to some immigration officer in a specific country, it was just a huge challenge."

SO WHERE ARE WE NOW, a year after it all started? The challenges for shipping are pretty much the same. But Maersk has become insanely good at "adapting", as Niels Bruus says. They have built up a network of local contacts around the world — people who know someone who has the number of a bureaucrat who can get the right stamp or visa or a super-fast corona test. "And if we cannot replace in one port, then we take people on board, and then we swail with extra people on board, and then we look at what options we have later to get them home. We have geared our organization to deal with the unpredictable."

However, there are still seafarers in hotels around the world who have not been home for more than a year and a half — they come from the island nation of Kiribati in the middle of the Pacific Ocean, which still has closed borders — even for their own seafarers.

But at the end of the day, the two Maersk leaders are proud. Proud of sailors who have sailed on without complaining, captains who have acted as doctors, the hundreds of employees who from one day to the next were retrained from shipping functions to run a travel agency and spend the day on troublesome phone calls. I also note that it must be pretty expensive to move a Filipino sailor from Sao Paulo on a chartered flight to a hotel in Copenhagen and on home through three countries.  

"Yes, it is," says Henriette. "I have been in the company for many years. And this crisis and the way we have reacted to it has reminded me why I am in this company."

Captain Jens Boysen had the same opinion when I spoke to him. Perhaps Denmark's largest company is simply extremely good at dealing with a crisis. There has always been something military about Maersk with their identical furniture in the offices, the seven-pointed star and the late legendary Maersk Mc-Kinny Moller as the steelgray admiral of the navy.

But Maersk, in turn, has learned another lesson over the past year.

It is perhaps here that I should disclose that I know Henriette Hallberg Thygesen privately. I was in the Navy with her husband many years ago. I therefore know that she is, more than most, shaped by globalization. She is the kind of person that reminds you that the world indeed felt progressively smaller over the last three decades. Henriette has education from three countries, has lived in a handful and speaks six languages, one of which is Mandarin. It's only half in jest that she's afraid of ending up talking like Gitte Stallone when she returned home from Hollywood.

Henriette Hallberg Thygesen is used to seeing the world from the pinnacle of globalization and from the top of one of Denmark's perhaps even one of the world's most streamlined and rational logistics companies. Maybe it's not so strange that Maersk was slow to react in the beginning? Of course, they had a belief that the global, political structures were just as effective, just as much supported by the ultra-rational worldview they themselves held. Everyone wants their goods out and the economy to spin, right?

"What are your thoughts on how the world reacted to the crisis?" I ask.

She is silent for a moment and speaks slowly as she answers. She is clearly looking for sufficiently diplomatic words. "This is at my very personal account... But I had a hope that in our international community there were more international solutions than the very national solutions that have come about," she says.

I ask if the globalized world has in fact proved to be much more fragile than we imagined. Henriette begins to say something about "national political currents'' of our time, but quickly stops herself before she finds a message from a more diplomatic set of neurons: "I personally hope that this international mindset will return."

Niels Bruus takes over. After all, he has slightly fewer political considerations to take.

"If anything, it has been made clear that there is some infrastructure that needs to be connected so that we can deliver what we all need. Looking back on the situation in March, we sat on our hands waiting for someone else to come and solve the problems and help us get back on track. There we have certainly learned that we will have to take action ourselves. We will have to act on the situation and not wait for the world to normalize. Because it did not happen."

The Emma Maersk container ship. (Photo from vesselfinder.com)

YOU SHOULD worry about the seafarers from Kiribati, but you need not worry about Maersk. Admittedly, when the pandemic erupted, it led to a slowdown in global trade. But then something happened that shows that even very highly paid business people can have a hard time mastering human psychology. A large part of the world's middle class was caged indoors, and when people could not get to the restaurant or the cinema, they started buying everything. The demand for physical things skyrocketed, and with it the price of container freight.

The red-hot market has created unrest and delays, also at Maersk, because the corona crisis is still creating disruptions everywhere in the supply chain with sick truck drivers and suddenly closed factories. But at the time of writing, Maersk expects to be in the midst of its most profitable quarter ever. In the last two months of 2020 alone, the price of container freight has quadrupled.

Globalization as a logistical operation has not had more sand in the gears since the fall of the Wall. But financial globalization is running like clockwork.

And Emma Maersk sails calmly on. When I talk to Jens Boysen, he's on his way through the Taiwan Strait. Through the three windows of his office the clouds are heavy over the waves, a light mist obscuring the horizon. It looks a bit like the North Sea in winter, he says.

Emma Maersk is heading to Hong Kong, where she will dock and be checked and painted. It takes two months. Two months, where the crew is once again caught on board due to Chinese rules. He has crew members who have been on board for seven months. If the ship is sent up along the coast of China after Hong Kong, they are unlikely to be home until some time in May.

It could be worse. He's thinking back to last summer.

"In the month of June, I was to sign off and it failed again. So you stand there as a Captain with a slightly difficult decision. Because on the one hand, you have people who are really exhausted, who can't go further, who do not want any more, who just have to go home. On the other hand, you have this ship, which just has to keep this supply chain. So back then I was close to having to say: We can not sail on. This is not going to work." — They managed to get the two off the ship, and the ship sailed on with a reduced crew. The chief mate was one of them, so Jens Boysen had to take double shifts himself.

"You can not even imagine how tired we were when we came to Europe. There was nothing more left in us," says Jens Boysen. "I am a sailor with all my heart, have been for 20 years. It is my great passion. I love my crew and being out at sea. But the last year has eroded that joy a little."



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