19 November 2013

[191113.EN.SEA] Maersk Chief Andersen Warns Smaller Players To Stop Ordering New Ships

MAERSK group CEO Nils Andersen has warned smaller carriers against expanding their fleets and container capacity after announcing strong third quarter results.

Smaller players, he said were putting their shareholders' money at risk by investing in new ships for the sake of remaining global carriers.

Mr Andersen, the ex-Carlsberg CEO, first took over the Danish shipping giant in 2007, when its container shipping arm was not doing well in the aftermath of the P&O Nedlloyd takeover.

Then came the banking crisis in 2009 bringing on the downturn with and cargo volumes declining for the first time since boxes began to carry cargo.

Large economic swings that have had an enormous negative impact on the container shipping, he said.

When times are good, if only briefly, weaker lines tend to order new ships, leaving the whole industry to cope with the fall-out during the inevitable down cycle, he told Lloyd's List.

"There is a lot of value destruction at the moment and a number of investors will not get their money back," he predicted. "You won't make yourself profitable by expanding these days."

Having surpassed most other global carriers after a strong second and third quarters when most were struggling, Maersk wants to take out capacity, rather than chasing cargo and market share, said Mr Andersen.

Although Maersk has retrofitted some ships, raising bridges or changing bulbous bows to expand capacity and improve efficiency, real gains have been made through better scheduling, reduced capacity and associated higher ship-utilisation levels, and slower steaming.

The P3 Network mega alliance, should it win regulatory approval, will deliver more efficiencies, he said.

Mr Andersen is confident that the joint fleet operation between the world's top three lines, Maersk MSC and CMA CGM, will benefit shippers bringing economies of scale provided by larger vessels.

Source : HKSG.

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