A Paradigmatic Shift
The turn of the millennium marked a paradigmatic shift in the development of Danish shipping. Throughout the second half of the twentieth century, the stable and concentrated industry had been dominated by a relatively small number of very old shipowners. After the year 2000, a much more dynamic group of companies developed and the sector became marked by large, medium and small companies. In terms of shipping policy, the strong and consistent pressure for liberal trade conditions was changed to a more holistic view of improving the maritime cluster conditions including low taxes, strong education and innovative research.
The concentrated industry structure in Danish shipping was historically deeply rooted. Three decades earlier, by 1960, about 80% of the Danish fleet was owned by the top ten largest shipping companies (Rasmussen et al. 2000). It was remarkable that seven of ten largest shipping companies anno 1960 were still to be found among the ten largest Danish shipping companies anno 1990 (Sornn-Friese et al. 2012; Tenold et al. 2012). Even by the late 1990s, Danish shipping was continuously dominated by these old dominant Danish shipping companies situated in Copenhagen: A.P. Møller/Maersk Line (1904), DFDS (1866), East Asiatic Company (1897), JL (1884), Norden (1871) and Torm (1889).
The six old Danish companies were founded between 1866 and 1904 when the international shipping industry was revolutionized due to the introduction of steamships, telegraph connections and steel constructions. As emphasized by the economic historians Chris Freeman and Francesco Louca, regular steel ships powered by steam engines were one of the essential core inputs for new trade patterns later known as the first globalization (Freeman and Louca 2001). Danish shipping did not define or drive this development, but the political and economic transitions before 1914 provided the foundation for the development in the twentieth century. From the 1930s to the 1990s, the old Danish shipping followed a shared strategic growth pattern characterized by three features: vertical integration in terms of investments in shipyards, maritime suppliers training facilities and trading companies; horizontal diversification both in terms of related maritime activities such as liner shipping, oil tankers and passengers transportation along with bulk-based tramp activities; and thirdly unrelated diversification in terms of manufacturing activities including oil, gas and services. The prominence of vertically integrated shipping conglomerates was still present at the end of 1990s, and in the annual report from 1997 by the Danish Shipownersâ Association, it was stated that â⌠Danish shipping companies are not involved in the sea leg of the trade exclusively, ⌠[they are] equally active in related areas, such as shipbuilding, offshore drilling, warehousing, storage, distribution logistics and the sale and purchase of shipsâ (Danish Shipownersâ Association 1997).
The weak structural dynamic and the mentioned strategic growth patterns of the dominant Danish shipping companies residues to Alfred D. Chandlers distinct analysis of large manufacturing companies founded between 1880 and 1920, which thanks to diversification and internationalization proved to be able to dominate their respective industries throughout most of the twentieth century (Chandler 1990). Business historians have suggested that after the 1980s, corporate growth patterns have been characterized by a âpost-chandlerianâ development with increased outsourcing and focus on core competencies rather than vertical integration and economies of scope (Robertson and Verona 2006). In line with this research, the central argument of this book is that at the turn of the millennium, the traditional characteristics of Danish shipping were about to change fundamentallyâin terms of both the structural dynamics (dominating large companies versus new dynamic and defining smaller companies) and the strategic dynamics (diversification and vertical integration versus outsourcing and focus). The background setting of the structural and strategic changes was an expanding merchant fleet in Denmark based on three important characteristics.
Firstly, the expansion was based on three well-known segments (dry) bulk, (product) tankers and (container) liner shipping. That development was in a remarkable contrast to the development of other small traditional maritime nations su...