Utilization Rates are “Not Super” Yet Maersk Line Hopes to Raise Trans-Pacific Rates in 2013

(Bloomberg) — Maersk Line, the world’s biggest operator of container ships, expects rates to rise on trans-Pacific routes next month because of an industrywide push and a recovering U.S. housing market.

“We are optimistic that we will get something,” Thomas Knudsen, head of Maersk Line’s Asia Pacific operations, said in an interview today in Singapore. He declined to comment on how big the potential increase may be.

The A.P. Moller-Maersk A/S unit and other container lines have agreed to seek a $400 per 40-foot box increase in Asia-U.S. west coast fees next month as they lay the groundwork for upcoming annual contract negotiations. A pickup in homebuilding is also boosting volumes, helping lines counter declines of more than 10 percent in Asia-Europe cargos, Knudsen said.

Maersk, based in Copenhagen, said Oct. 12 that it will remove 19 ships from Asia-Europe routes in a bid to revive rates. The cut brings its total 2012 capacity reduction on the sector to 21 percent. Hanjin Shipping Co., Cosco Container Lines Co. and other lines have also cut services for the traditionally slower end of the year.

The cuts mean that Maersk may able to get some rate increases on Asia-Europe routes ahead of the Chinese New Year, which falls in February, Knudsen said.

“The initial indications are looking significantly better than they were last year,” he said. “We are quite optimistic about the contracting season.”

Falling Rates

Asia-Europe rates have slumped 35 percent since the end of June to $1,225 per 20-foot box last week, according to the Shanghai Shipping Exchange. RS Platou sees cash break-even at between $1,250 and $1,350. Spot rates for cargo hauled to the U.S. west coast have fallen 13 percent to $2,224 per 40-foot box.

Trans-Pacific ships are fuller than those traveling to Europe, Knudsen said. Still, on both lanes utilization rates are “not super,” he said.

Maersk expects a marginal increase in full-year trans- Pacific volumes this year, compared with a decline on Asia- Europe routes.

The Transpacific Stabilization Agreement, a group for container lines operating on Asia-U.S. routes, has set a guideline to raise rates by $800 a box in annual contracts that takes effect around May 1. The group has limited antitrust protection.

Confidence among homebuilders, as measured by the National Association of Home Builders/Wells Fargo index, held at 41 in November, the highest since June 2006, data today may show, according to a Bloomberg survey. Readings lower than 50 mean more respondents still said conditions were poor.

Maersk Line reiterated this month that it expects a “modest” profit in 2012. It cut its estimate for global container demand growth to 3 percent compared with a 4 percent prediction made in August.