Maersk expresses optimism for 2010

MAERSK    SHIPPING

Singapore - 2009 was the worst year for both the shipping industry and Maersk Line since World War II, Maersk said.

For the first time in a 100 year history, the AP Moller Maersk Group suffered its worst ever quarterly loss in Q1, posting a half yearly loss, as depleted consumer demand resulted in significant overcapacity in the container shipping industry.

"Many shipping companies have postponed existing orders for new vessels, idled existing vessels and increased their scrapping programme all in an effort to take cost out and match capacity better to the prevailing demand," said Jesper Praestensgaard CEO of Maersk Line Asia Pacific.

This trend is expected to continue into 2010, and Maersk expects the current tight capacity situation to continue. In turn, it would help them increase rates further.

Praestensgaard was quoted in The Business Times Singapore as saying: "We believe there is a positive momentum for growth, due to a pick up in demand and efforts to curb capacity increases. But it will be a modest growth rate compared with an industry yearly average of 10% in the past 30 years. It will be a while more before traditional consumer markets like the US and Europe return to their former strength, and this contributes to the modest growth rates we must expect in the near future in container volumes."

Group CEO Nils Andersen also expressed cautious hope for the New Year when asked what kind of timeframe he saw for a recovery. "We are not optimistic about the earnings potential for container shipping in the short to mid-term," he said, noting that restoration of balance between supply and demand could take years.

Still, the company hoped the tide would start to turn in 2010, beginning with growth in the US.

Mr. Anderson said Maersk remained committed to container shipping, and is determined to stay at number one in quality, and hopefully profitability as well. But the company would not "do illogical things" to defend its number one position. What mattered most was the group's excellent reputation and ability to offer quality services at competitive prices.

He also noted how the shopping industry could benefit from further consolidation, and that a long recession would likely force some box lines out of business. While he doubted that consolidation would come easily or quickly, he mentioned that if the failure of competitors presented an opportunity for the group to expand at the right price, then "yes, maybe we could look at that".

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