Maersk Line Says Container Market May Grow 3% Amid Overcapacity

Maersk Line, the container unit of A.P. Moeller-Maersk A/S (MAERSKB), said annual growth in the industry may be as low as 3 percent, forcing operators to focus on cost cuts amid vessel overcapacity.

Global demand will grow 3 percent to 6 percent a year in until 2015, Maersk Line said at an investor meeting in Copenhagen today. That compares with a forecast of 6 percent to 8 percent made two years ago.

Maersk Line, which transports about 15 percent of the world’s containers, reported rising profits last month and raised its full-year forecast as accelerating cost cuts countered a decline in freight rates. The Copenhagen-based company is battling a fifth year of industry overcapacity after a boom in ship orders coincided with the global financial crisis, triggering the worst slump in freight demand since containerization became global in the 1970s.

“A deflationary mindset is needed,” amid overcapacity and low growth rates, Maersk Line said in the presentation.

The company said it will defend its 15 percent market share and grow at the same pace as the industry.

“Giving up market share would make us irrelevant in 10 years,” the company said in the presentation.

Maersk said Aug. 16 that second-quarter costs declined 12.7 percent at its container unit. In the first quarter, unit costs dropped 7.1 percent. Maersk Line reported a doubling of second-quarter net income to 2.5 billion kroner ($450 million), even as revenue declined 10 percent.

Maersk Line has “substantial” levers to suit capacity to meet demand, including adjusting the number of chartered ships, it said today. Its vessel orderbook will allow the company to grow with the market “toward” 2015, without making investments in new ships, the company said.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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