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Maersk Takes 19 Ships Off Asia-Europe Route as Demand Falls

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Maersk Removes 19 Ships From Asia-Europe Route as Demand Tumbles
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. Photographer: Munshi Ahmed/Bloomberg

Oct. 12 (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 employs 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.

“Asia-Europe capacity is too great after the significant reduction in demand over the summer and companies are having to adjust much faster than they’re accustomed to,” said Peter Sand, chief analyst at Danish shipping association BIMCO.

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.”

Shares Fall

Volumes in the third quarter, normally the peak season for container flows as retailers in Europe and North America stock up with Asia-produced goods for the festive season, have been falling compared with last year, Sand said.

A.P. Moeller-Maersk traded down 1.2 percent at 40,520 kroner as of 1:12 p.m. in Copenhagen. The stock has gained 7 percent this year, valuing Denmark’s fourth-biggest company at 174 billion kroner ($30 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.

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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