The Sealand brand has a long history in shipping, especially in the Americas. First adopted by American containerization pioneer Malcom McLean as “Sea-Land” in the 1960s, it was acquired by Maersk in 1999. The Danish company incorporated the name between 2000 and 2006 during the “Maersk SeaLand” phase, after which is was discontinued until 2014.
In 2015, “SeaLand” became the brand for intra-Americas shipping within Maersk. Finally, in 2018, the name was revived as a global player in regional trades, with the discontinuation of Seago Line (intra-Europe) and MCC (intra-Asia) brands. That amalgamation produced the current Sealand company, with three regional operations in the intra-Americas, intra-Europe & Mediterranean, and intra-Asia.
Maritime South has discussed the company’s present and future with the Americas CEO, Michael Britton.
From 2008, Mr. Britton was responsible for Hamburg Süd’s business in the Asia Pacific region as general manager. Since 2020, he leads Sealand in his home country, the United States, after nearly 20 years overseas.
Maritime South: The recent Suez crisis reminds us that supply chain bottlenecks could become a very big problem again in the future. How do you evaluate Sealand’s risk exposure to a similar closure in the Panama Canal?
Michael Britton: I think there’s always risk out there. Part of what we are trying to do with our investments in technology is to develop products that allow us to create more transparency over the logistics supply chain, so that we can react to this kind of shocks, whenever they would come.
You know, we did have an incident not too long ago when a bridge in the Panama Canal was damaged and interrupted rail traffic. So, we always have to build our schedules with a degree of buffer so that we can maintain a high degree of reliability for these unexpected events. And we’re seeing challenges all across the horizon these days. Fuel prices are increasing. The Suez Canal delays have disrupted the flow of containers, and that is a delicate balance, where we try to make sure we have the right containers in the right place at the right time. And when you have these types of blockages, it exposes where some carriers have vulnerabilities.
I think we do have a global network and that helps us to rebound and respond. But it highlights this need to continually invest in technology to make the supply chains more transparent. And that’s what we’re doing as a group with the products of TradeLens, with the lead logistics products and supply chain management products.
Maersk has been doing quite some brand changes over the last few years. After the shut down of Seago and MCC in 2018, we then saw last year the discontinuation of Safmarine and Damco. Do you see a risk of the Sealand brand also disappearing?
No, I don’t see that. The intra-Americas trade in general is a very important part of the Maersk business and Sealand and now Hamburg Süd are two brands that bring a great deal of focus to those trades and that focus has enabled Maersk to have a profitable and sustainable growth in those markets. That wasn’t the case before the introduction of Sealand and before the acquisition of Hamburg Süd.
So, what we have now are three global brands, each with their own value proposition, which we believe can carry us forward on our current journey, which is trying to develop more customer-centric solutions and end-to-end logistics supply chains.
Is there a market need to redeploy the Sealand brand on ships and containers, in the same way as Hamburg Süd or Aliança do?
I don’t know whether we feel it is so important to the Sealand brand itself. We have our own Sealand identity, we invest a great deal to make sure that our customers can access us and know us, and know the value that we provide. But part of our value is that we are part of Maersk, we are part of this company which brings a tremendous economy of scale, a tremendous commitment to investment in new technologies and new products. That’s a strength for us. And in fact, the full branding of Sealand is, “Sealand, a Maersk company”. We believe that that endorsement of the Maersk brand is valuable.
“The competitors of Aliança are very much different from the competitors of Maersk or the competitors of Sealand”
Do you see internal competition between the branding of Aliança and Sealand on the East Coast of South America (ECSA)?
I don’t see internal competition. I just see the recognition that we need to focus on specific markets to be successful and to bring a higher-level product to customers in those markets. Aliança is a Brazilian company. They know the Brazilian market backwards and forwards. The competitors of Aliança are very much different from the competitors of Maersk or the competitors of Sealand.
So Aliança is a product that has been created to address a specific customer need. It’s very challenging to find any one product that suits every customer.
What we’ve learned – and that sounds intuitive – is that customers have different needs, and they have different expectations, and we’ve developed now a smaller group of products, but a group of products nonetheless that are designed to address each of those individual needs.
Looking at the present but also the future, what is the balance for Sealand between owned and leased assets?
I can’t tell you too much about the future, but the group has found the right balance over the last few years. There has been a focus on owning a high share of the largest vessels, the most technologically advanced vessels, which we need for the largest trades, and balancing that with exposure in the charter market in smaller segment sizes. Right now, our real focus is on how do we build for a sustainable trade.
In February we announced the group is going to deploy the first vessel powered by green methanol. We are using one of smaller ship size, one which is specifically deployed in Europe as a first test case. So, it’s very much on the focus and on the forefront of what we want to do, and I think the group has also made it clear that we want to eventually decarbonize our entire ocean product by 2050. So, when we build ships, it will be with a purpose, and a great part of that purpose will be around sustainability.
“Traditional fossil fuels don’t really show the true cost”
Regarding the decarbonization drive, do you see a change from the commercial side, more clients wanting to lower their carbon footprint and also willing to pay more for it?
Yeah, I think people are certainly open to the idea. It’s more about having a conversation to understand how much does decarbonizing cost, how big is the impact on climate on reducing that carbon footprint. They are looking for value for money, I suppose you could say.
There is definitely a recognition that this is important and we need to all be part of the solution. I think that, unfortunately, using carbon neutral fuels, like biofuels, are more expensive than traditional fossil fuels, but the traditional fossil fuels don’t really show the true cost that they have on the climate. So, the green premium, if you will, for some of those biofuels is there, but it’s something that we’re trying to work to bring down.
How do you see the development of low carbon fuels in Latin America?
Difficult for me to comment on what progress has been made. I think, traditionally, Brazil has invested a great deal in ethanol and other biofuels. The extent to which those are really carbon neutral I could not comment. I think that’s an opportunity, for sure. Because these technologies will improve, these types of ships and trucks and trains will be part of our future and I think companies that are investing in providing these fuels in a cost-effective way will do well on the future, they will have an advantage for sure.
How are the company’s volumes evolving since the pandemic hit and in what direction do you see them moving post-Covid, including the specialized trades such as reefer cargo?
Reefer cargo is a tremendous part of the total trade in the Americas and also within Latin American countries. And that really stayed strong. Through all the challenges that we faced in 2020, the foodstuffs, refrigerated products, that continued to grow.
There were some changes in who was buying or how people were purchasing, so there may have been drops in the consumption in the hospitality and tourism industries. But that was offset by increases in retailers and grocery chains. The agricultural products have continued to be an important part of the total trade.
We saw some shifting of trade patterns. Because of Covid, some factories in Latin American countries were closed because of prevention measures and lockdowns. Producers became importers, and became importing products from other factories in other parts of the Americas that weren’t under a specific lockdown. And some of that is continuing, so in some of those trades we’re still dealing with the challenge that Covid has presented us, and there are still countries experiencing lockdowns and limitations on production.
“We’re continuing to see that volumes are growing”
Not every industry has come back to the strength that it was prior to Covid. The apparel industry is one that is very important for the intra-Americas, and that took a big dip because of the cancellation of several sport seasons, whether it was professional or amateur, or the reduction of tourism. That also takes time to come back, but as we move through 2021, we’re continuing to see that volumes are growing, people are consuming products in all the economies of the Americas, even more so than services.
We see growth in some raw materials, like wood products and forestry products, which are used when people are remodeling their homes in the US, do-it-yourself products.
What could be the impact of US president Biden’s USD 2 trillion infrastructure plan on Sealand’s business?
It’s probably too early to say what the impact will be, but we welcome investments in infrastructure. What we are seeing today is that there are challenges with the port and intermodal infrastructure in the United States. We are experiencing congestion in ports and inland depots around the country. Any investments in infrastructure, as what is being discussed, should help to lower the cost for consumers and make the entire supply chain more efficient.
Are you having any issues currently with the proportion of specific types of containers in your network, especially the case of reefer and empty containers?
Typically, in the intra-Americas trades, many of the countries that are importing refrigerated products, are exporting general cargo. This can be a challenge, to balance the flows of refrigerated and general purpose dry containers.
One solution we have for that is that we offer customers the opportunity to use a reefer container as non-operating reefer, or as a general purpose container. And that has proven to be very successful. We offer competitive pricing for those, because it’s a way for us to lower our cost of moving empty boxes around the world. We share those savings with the customer and everyone benefits.
“We just try to focus on making sure we can move cargo as fast as possible, because that seems to be highest priority for everyone at the moment”
Since you mentioned pricing, the shippers are not that happy with the pretty substantial increase in prices over the last 6-9 months. Do you see the freight rates keeping at the same levels until the end of the year?
For the intra-Americas trades we haven’t seen so much change in the pricing as we have seen perhaps in the short-term market in some of the large East-West trades. Most of the business we carry is under long-term contracts agreements, and those freight rates we only discuss in relatively few occasions and they only really adjust for bunker prices. The short-term market in many trades has seen rate increases, but we just try to focus on making sure we can move cargo as fast as possible, because that seems to be highest priority for everyone at the moment.
If you look at our networks today, we are deploying more capacity than we did prior to Covid. We are also deploying more containers than we did pre-Covid. We made a lot of investments to really just focus on moving goods as fast as possible.
“More and more customers are asking us to deliver goods to inland locations”
Containerization is of course not a new thing, it’s decades in the making, and pretty mature in many industries. But is there still space for containerization in the Americas?
I think for sure there are still opportunities for containerization. One of the big advantages of containerization is that it allows individuals or companies to ship products to multiple locations in a very cost-effective way, without having to handle the products multiple times. So, what we are seeing is that more and more customers are asking us to deliver goods to inland locations, whether in North America, or Mexico, or parts of Latin America, not just at the ports. And containers are a far more cost-effective way to do that. So yes, there is tremendous opportunity for developing inland logistics distributions in many countries across the Americas.
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