Image: AP Moller-Maersk
Jan. 15 (Bloomberg) — A.P. Moeller-Maersk A/S, owner of the world’s largest container line, said the industry needs to raise prices by as much as $500 a box on Asia to Europe trips to restore the trade route to profit.
“Just like everyone else on Asia-Europe, we don’t make money at the current rates,” Lars Mikael Jensen, head of Copenhagen-based Maersk Line’s Asia/Europe network, said by phone. “Rates will need to go up by $300 to $500 per container to make the industry profitable.”
Container lines including Maersk are pushing for higher rates after overcapacity eroded earnings last year. Efforts to boost prices have included idling ships and slowing speeds. The Shanghai Containerized Freight Index, a measure of freight rates out of the Chinese port, has declined about 18 percent since a May 4 peak.
“Maersk Line is in the same situation as the other container lines and we need to move rates higher,” Jensen said, repeating comments reported today in Copenhagen-based newspaper Borsen.
Maersk Line had planned to increase rates on Asia-Europe trade by $550 per 20-foot container starting Dec. 15. The company cut capacity on the route, its biggest, by about 21 percent last year amid a slowdown in demand. Global container orders probably would grow 3 percent in 2012, compared with an August forecast for 4 percent, Maersk said Nov. 9.
Maersk shares declined as much as 0.6 percent in Copenhagen trading today. The stock was down 0.5 percent to 45,800 kroner at 2:49 p.m. in the Danish capital compared with a 0.6 percent advance in the Copenhagen 20 index of Denmark biggest companies.
- Christian Wienberg, Copyright 2013 Bloomberg.
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Oversupply of Vessels on Asia-Europe Trade Forces Maersk Line to Make Adjustments
So am I to assume that the surplus money has run out? As I recall Maersk, CMA-CGM, MSC etc. were purposely absorbing losses in freight rates last year to starve out the smaller competition. I guess that strategy hasn’t worked out as planned…