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Maersk Line Says Capacity Won’t Be Reduced From Current Level

Aug. 16 (Bloomberg) -- A.P. Moeller-Maersk A/S Chief Executive Officer Nils Smedegaard Andersen said the world’s largest container shipping line won’t cut capacity further.

“We have reduced capacity somewhat and have also handed a number of vessels back to the owners,” Andersen said. “We’re now fine and we don’t foresee taking out more capacity.”

Capacity in the global container industry grew 5.3 percent to 16.9 million standard containers at the end of the second quarter from the same period a year earlier as 74 new vessels with capacity of 475,000 boxes were delivered, according to Maersk. At the same time, idling of ships fell to 2.6 percent of the fleet, from 2.8 percent at the end of June 2012. New deliveries in 2013 are seen at 9.5 percent of the fleet.

“The supply growth is somewhat overestimated because what the industry is doing is that it optimizes, taking out some strings and slowing speeds to cut the oil consumption,” Andersen said. “Based on the latest GDP figures, maybe the situation for Europe will slowly start to improve and the need to take out capacity will be less.”

Maersk Line cut its capacity by 0.9 percent in the three months through June compared with the same period a year earlier, while the number of vessels dropped 8.7 percent. The company had idled capacity of 58,000 standard containers, compared with 163,000 boxes at the end of the first quarter.

A.P. Moeller-Maersk today raised the earnings forecast for its container-shipping line, saying it now expects Maersk Line to report a 2013 profit that will be “significantly above” earnings last year compared with a previous forecast of profit “above” the 2012 level. Maersk Line’s net income rose to $439 million in the second quarter from $227 million, as lower fuel prices and a reduction in costs offset a drop in freight rates.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net

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

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