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Maersk Gains From U.S. Military’s $11.5 Billion War Shipments

Maersk shipping vehicles from war

The Department of Defense is increasingly shipping war supplies on commercial lines. Since 2001, companies such as Maersk and Neptune Orient Lines Ltd. (NOL) have been awarded at least $11.5 billion in defense contracts and have handled more than 90 percent of all military cargo to and from Iraq and Afghanistan. Beaumont, Texas, is the largest U.S. commercial port handling gear from the war zones. Photo: Aaron M. Sprecher/Bloomberg

Maersk, owner of the world’s largest shipping line, has benefited the most from the U.S. military’s dependence on commercial lines.

The company, based in Copenhagen, received almost half the military’s $1.82 billion in contracts last year to ship supplies and equipment around the globe, most of it tied to Iraq and Afghanistan, according to Defense Department data. Maersk also arranges rail and truck transport as part of the agreements.

While the military accounts for a small share of Maersk’s revenue, the work tends to offer higher margins because of its specialized nature, said Jacob Pedersen, an analyst with Sydbank A/S (SYDB) in Denmark. It also may help offset a commercial shipping slowdown tied to a glut of new vessels, he said.

American President Lines Ltd., part of Neptune Orient Lines Ltd. of Singapore, received $421 million in defense contracts in fiscal 2011.

More at Bloomberg


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