Maersk Line Opts For Price War On Asia-Europe Routes [REPORT]

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October 5, 2011

COPENHAGEN (Dow Jones)–The world’s largest container shipping company Maersk Line is stepping up the price competition on Asia-Europe routes in an attempt to squeeze out smaller peers, writes Danish daily Morgenavisen Jyllands-Posten Wednesday.

“There’s clearly a game going on as to who gets to stay on the Asia-Europe routes in the long run,” Jyllands-Posten quotes Lars Jensen, head of SeaIntel Maritime Analysis, as saying.

“Maersk Line, MSC and an alliance of four shippers are really putting on the thumb screws. The shippers that are one level below have the choice between pest and cholera,” Jensen says.

Maersk Line, a unit of Danish business conglomerate A.P. Moller-Maersk A/S (MAERSK-B.KO), previously said it would rather protect its bottom line than engage in price wars in a weak rate environment. But now Maersk Line has opted to maintain full capacity and accept a 2011 loss in an attempt to bring about a demand-supply balance by forcing peers to remove capacity.

“Maersk considers it an investment where a low return on investment must be accepted in return for a better balance in the market,” Handelsbanken analyst Dan Togo Jensen tells Jyllands-Posten.

Maersk declined to comment, the paper writes.

Newspaper website:

-By Flemming Emil Hansen (c) 2011 Dow Jones & Company, Inc.

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