Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Maersk Says Container Market May Grow 3% Amid Overcapacity

Don't Miss Out —
Follow us on:

Sept. 26 (Bloomberg) -- Maersk Line, the container unit of A.P. Moeller-Maersk A/S, 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 until 2015, Maersk Line said at an investor meeting in Copenhagen today. That compares with average annual growth of 6 percent in the period 2002 to 2012.

Maersk Line, which transports about 15 percent of the world’s containers, raised its full-year profit forecast last month as accelerating cost cuts countered a decline in freight rates. The Copenhagen-based company is battling 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 Chief Executive Officer Soeren Skou said today in a presentation. Cost cutting will continue and be the company’s “lifestyle, not a diet.”

The company 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 about 10 years,” Skou said.

Costs Decline

Maersk reported last month a 12.7 percent decline in second-quarter costs at its container unit compared with a 7.1 percent drop in the first quarter. Net income at Maersk Line doubled in the second-quarter to 2.5 billion kroner ($450 million), even as revenue declined 10 percent.

Maersk rose as much as 1.7 percent in Copenhagen. The stock added 0.4 percent to 52,050 kroner at 11:25 a.m in the Danish capital.

Maersk Line has “substantial” levers for adjusting capacity to match demand, including the number of ships it charters, the company 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.

“It’s a tough industry,” Skou said. “We need to invest less in Maersk Line in coming years.”

Nils Smedegaard Andersen, CEO of the parent company A.P. Moeller-Maersk, said he will continue to channel investments to units that give the highest yields so the company can meet a target of more than 10 percent return on invested capital.

As well as Maersk Line, the company owns a drilling unit, an oil explorer and a port division.

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

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.