Maersk makes dramatic move in Asia-EU trade

Oversupply of container vessels operating on the Asia – Europe trade lane has pushed Maersk Line’s container freight rates to unsustainably low levels. In order to rationalize its service, Maersk Line is removing 9 percent of its vessel capacity currently operating on the Asia – Europe trade. ??

“With this adjustment we are able to reduce our Asia – Europe capacity and improve vessel utilization without giving up any market share we have gained over the past two years. We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability,” said Maersk Line CEO, Søren Skou. ??The 9 percent capacity reduction will be facilitated by a vessel sharing agreement with the French container shipping line, CMA-CGM.

With this agreement, Maersk Line is able to remove 9 percent of its vessel capacity while still maintaining full and competitive coverage for its customers. In addition, the cooperation helps Maersk Line cut the cost of serving West Mediterranean markets, enabling Maersk Line to deploy its own vessels to areas where they are most needed as well as pursue further slow-steaming. ??A January report from shipping analyst, Alphaliner, predicted Europe – Far East container traffic growth would slow to 1.5 percent in 2012 from an estimated 2.8 percent in 2011, due to a weakening economic outlook in Europe. The industry container vessel fleet, by contrast, is set to grow by 8.3 percent in 2012.
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“The Asia – Europe trade remains the world’s busiest trade lane, however the supply of vessels currently operating on this trade simply outweighs the demand. We are therefore rationalizing our service by taking out vessel capacity and thereby reducing costs,” said Vincent Clerc, Chief Product and Yield Officer for Maersk Line.

?Where commercially appropriate, Maersk Line will also consider additional opportunities to reduce capacity, including redelivery of time charter tonnage, the use of lay-ups and slow-steaming. Additionally and in line with previous guidance, Maersk Line will not declare the option for the last ten Triple-E vessels

The decision to stop all bookings, as well as the duration of the booking suspension, is highly unusual as eastbound cargo volumes from Europe usually represent less than half of westbound volumes,” said Stephen Fletcher, commercial director of the Paris-based consultancy, Alphaliner. “While most carriers are reporting mstrong booking positions until April, none of Maersk’s competitors have ceased to take bookings on such a scale.”

Fletcher added that some carriers have turned away selective bookings to face the sudden space shortage on the eastbound market.