[210212.EN.SEA] Reality Check: Asia-Europe Conditions Induce Maersk Cut Capacity 9pc

MAERSK has announced it will cut Asia-Europe capacity nine per cent, ignoring its earlier declaration to keep capacity high and increase market share, sparking a fresh consolidation of services among its rivals.

Back in November, Maersk Group CEO Nils Andersen told Bloomberg: "We are well positioned for a stretch of tough competition. Its natural that the smaller players question whether it's good to keep competing."

But today Maersk is telling a different story: "Oversupply of container vessels operating on the Asia-Europe trade lane has pushed Maersk Line's container freight rates to unsustainably low levels," said a Maersk statement.

And the development comes in the wake of suprising changes in the group's executive suite. Today, Mr Andersen, aged 54, is out of action recovering from heart surgery; Maersk Line CEO Eivind Kolding, 52, has departed for Dansk Bank; He has since been replaced by 44-year-old Soren Skou, former CEO of Maersk Tankers.

Now in charge, Mr Skou said: "With this adjustment we are able to reduce our Asia-Europe capacity and improve vessel utilisation without giving up any market share we have gained over the past two years."

Starting from early April, amendments will be made to Maersk's AE11, AE15, and AE20 services. From then onwards, the AE11 will be jointly operated with CMA CGM, which will name the service MEX. The service will deploy eleven 12,500-TEU ships.

The port rotation of the AE11 is Qingdao, Busan, Shanghai, Ningbo, Shenzhen-Yantian, Shenzhen-Chiwan, Guangzhou-Nansha, Tanjung Pelepas, Port Kelang, Malta, Valencia, Barcelona, Marseilles-Fos, Genoa, Malta, Port Said, Khorfakkan, Port Kelang, Singapore and back to Qingdao.

The Alphaliner report said that as a result of this reshuffle, the AE15 moniker, Maersk's name for CMA CGM's existing MEX service, on which it currently purchases container slots, will be scrapped.

From April, the two carriers will also jointly operate a second service, which Maersk will name the AE20 and CMA CGM will term the MEX3.

The rotation for the AE20/MEX3 is: Xiamen, Shanghai, Ningbo, Shenzhen-Yantian, Guangzhou-Nansha, Tanjung Pelepas, Port Kelang, Beirut, Malta, Valencia, Malaga, Tangiers, Port Said, Port Kelang, Singapore and back to Xiamen.

The service will deploy ten 9,500-TEU ships.

Maersk is also terminating one of seven Asia-Northern Europe loops, "partly a result of the end of a vessel-sharing agreement with CMA CGM on that trade, as CMA CGM commences its own Asia-Northern Europe deal with Mediterranean Shipping Co in the coming weeks," the report said.

"The supply of vessels operating on this trade simply outweighs the demand," added Vincent Clerc, chief product and yield officer at the Danish shipping line.

Source : HKSG, 22.02.12.