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Maersk Line Removes 19 Ships from Asia-Europe Trade, Further Cuts Possible

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October 12, 2012

(Bloomberg) — A.P. Moeller-Maersk A/S, the world’s largest container line, said it will remove 19 ships from Asia- Europe trade lanes in a bid to bolster rates as demand slumps.

Maersk will permanently scrap the AE5 service, which operates eight vessels, and halt the AE9 sailing, which has 11, until early December, the Copenhagen-based company said today. The action will bring its total capacity reduction on the route to 21 percent this year after a 9 percent cut in February.

Container rates from Asia fell below break-even last month as Europe’s sovereign debt crisis depressed demand for consumer goods, according to London-based ship broker ICAP Plc. With economies remaining weak, volumes may drop 3 percent for 2012 as a whole, and Maersk could remove more ships and cut sailing speeds to further manage capacity, it said in a statement.

“There is currently no need for the number of ships sailing,” said Vincent Clerc, Maersk’s chief trade and marketing officer, adding that the company will take steps to adjust to declining demand “without reducing our market position.”

A.P. Moeller-Maersk traded down 0.9 percent at 40,640 kroner as of 11:43 a.m. in Copenhagen. The stock has gained 7.3 percent this year, valuing the group at 174 billion kroner ($30.3 billion).

Vessels on Maersk Line’s AE5 service each have a capacity of 6,500 standard 20-foot containers of TEUs, while ships on the AE9 route can carry 8,000 TEUs.

The Shanghai Containerized Freight Index, a measure of rates for goods leaving China’s busiest port, fell 1.1 percent today to the lowest value since March 23.

– Christian Wienberg, Copyright 2012 Bloomberg.

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