Maersk looks to diversify Indian revenue with new rail service for auto companies

By Aditi Shah

NEW DELHI (Reuters) – Maersk has launched a rail service between its port in western India and the northern automobile manufacturing hub of Gurugram as the shipping group looks to boost revenue from its “non-ocean” business, its South Asia head told Reuters.

The rail service, which will carry auto parts for export and return with import cargoes, will also ensure companies have more predictability in managing their supply chain, Vikash Agarwal, managing director, Maersk South Asia said on Tuesday.

Last year, the coronavirus pandemic disrupted supply chains for auto and other companies with road transport coming to a near-halt during the nationwide lockdown. India is now seeing a second wave of infections and several states have imposed curbs and curfews, raising fears of disruption.

Agarwal said that while some companies went back to using trucks, several in the auto, garment and chemical sectors have stuck to railways.

“The customers who are contracting with us on the long term are considering rail as a sustainable solution,” he said.

While the pandemic has accelerated Maersk’s plan to make a bigger push into railways in India, it also comes as the company is diversifying globally and wants to boost revenue from “logistics & services” which include rail and road transport, air freight, warehousing and supply chain management.

“Globally, Maersk wants to have a healthy balance between ocean and logistics & services (non-ocean solutions) and the strategy remains the same for India,” Agarwal said, adding that around 25%-30% of its export-import cargo in India is on rail.

The Danish group’s global chairman, Jim Hagemann Snabe, told shareholders during the annual meeting in March that the plan in the long run was to get about half its earnings from logistics & services and the terminal business where profitability is higher. It would also reduce dependence on freight rates.

Maersk said it has signed up more than 25 companies for its new service, which will connect directly to its shipping routes to North America for exports while bringing import cargoes from the Far East and Southeast Asia. It did not disclose any names.

Gurugram is home to India’s biggest carmaker Maruti Suzuki, motorbike maker Hero MotoCorp and auto parts suppliers like Continental.

(Reporting by Aditi Shah; editing by David Evans)