A vessel belonging to Maersk firm. (Photo Credit: Maersk)

Maersk building 20 mega-ships despite 'challenging' conditions

DENMARK
Monday, May 20, 2013, 23:20 (GMT + 9)

Danish shipping firm Maersk is going ahead with a plan to build 20 ships stretching almost a quarter of a mile long. These new ships -- which will be some of the largest in the world -- are expected to give the company a better competitive edge on the Asia to Europe routes thanks to these vessels' ability to save on fuel and operational costs.

"Global demand for seaborne containers is expected to increase by 2-4 per cent in 2013, lower on the Asia-Europe trades but supported by higher growth for imports to emerging economies," the company said.

However, Chinese and other companies are also building around 100 such vessels. Not to mention that trade flows between the two continents are cooling off, causing many shipping lines to lose money.

The challenge for Maersk now is to fill up its vessels. These days are not as busy or as profitable as they were when the firm first made its order for the 20 mega-ships.

"[These vessels are] much more economical to run -- if you can fill them up," John Singleton of the Handy Shipping Guide told the BBC.

"It is a really stupid, stupid strategy to deploy more capacity," stated Søren Skou last month, chief executive for Maersk Line, Ship & Bunker reports.

He has also warned that the whole shipping line industry could be approaching a rate war if more vessels are not removed from service.

Nils Andersen, CEO of Maersk Line's parent company, AP Moeller-Maersk (Maersk), has said that the company will begin using the new ships gradually as it removes its smaller ships, to avoid overcrowding the market with more vessels.

Meanwhile, Maersk’s earnings fell by 30 per cent in the first quarter of 2013 and the firm dropped its capacity by 14 per cent in 2012.

The company called the current conditions “challenging” and expects that the result for 2013 will be lower than last year’s of USD 4 billion, while the net result excluding exceptionals is anticipated to be in line with the 2012 figure of USD 2.9 billion, 4 Traders reports.

Given these figures, not everyone agrees that Maersk’s move is a smart one.

By Natalia Real
[email protected]
www.seafood.media

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