Shipping giant Maersk Line has revealed that an oversupply of container vessels operating on the Asia–Europe trade lane has pushed its container freight rates to 'unsustainably low levels', leading it to rationalise services by removing 9 per cent of its vessel capacity on the trade lane.
'With this adjustment we are able to reduce our Asia–Europe capacity and improve vessel utilisation without giving up any market share we have gained over the past two years,' said Maersk Line CEO Søren Skou. 'We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability.'
According to the group, the 9 per cent capacity reduction will be facilitated by a vessel sharing agreement with French container shipping line CMA-CGM, allowing Maersk Line to remove 9 per cent of its vessel capacitywhile still maintaining 'full and competitive coverage for its customers'.
In addition, the cooperation helps Maersk Line cut the cost of serving West Mediterranean markets, enabling the Denmark-based group to deploy its own vessels to areas where they are most needed as well as pursue further slow-steaming.
Per the agreement, Maersk Line and CMA CGM will merge their respective AE11 and MEX services into one new AE11/MEX (operating 12,500 TEU per week) to cover the trade from the Far East to and from Spain, France, Italy.
To cover the Mediterranean hubs, Maersk Line and CMA CGM will merge their announced AE20 and FAL9 services into a new AE20/MEX3 service, operating a weekly capacity of 9,500 TEU. Maersk Line will further complement the coverage of its volume requirements in the Mediterranean hubs with the reinstatement of two port calls in Algeciras, Spain on its North Europe Daily Maersk strings.
A January report from shipping analyst Alphaliner predicted that Europe–Far East container traffic growth would slow to 1.5 per cent in 2012 from an estimated 2.8 per cent in 2011, due to a weakening economic outlook in Europe. The industry container vessel fleet, by contrast, is set to grow by 8.3 per cent in 2012.
'The Asia – Europe trade remains the world's busiest tradelane, however the supply of vessels currently operating on this trade simply outweighs the demand,' said Vincent Clerc, chief product and yield officer for Maersk Line.'We are therefore rationalising our service by taking out vessel capacity and thereby reducing costs.'
Where commercially appropriate, Maersk Line said that it would also consider additional opportunities to reduce capacity, including redelivery of time charter tonnage, the use of lay-ups and slow-steaming. Additionally, and in line with previous guidance, Maersk Line will not declare the option for the last ten Triple-E vessels.
