Maersk to slash Asia-Europe capacity

Robert Wright

Denmark?s Maersk Line, operator of the world?s largest container ship fleet by capacity, is to significantly reduce capacity in its Asia to Europe services, in a strategic volte-face likely to end the industry?s damaging rate war.

Maersk Line said that the oversupply of ships in the Asia to Europe route had pushed rates per container down to ?unsustainably low levels?.

The company plans to reduce by 9 per cent the capacity of its services in the most important long-haul container shipping route.

One former container line senior executive called Maersk Line?s change of heart ?a hugely significant moment?.

AP M?ller-Maersk, the line?s parent, last year admitted it had caused ?a little bit of panic? among its competitors with the Daily Maersk, a service offering departures every day from key Asian ports to key European ones. Container lines traditionally organised services around weekly departures on each service. Maersk Line had cut its rates when its panicking competitors did the same.

S?ren Skou, who took over as Maersk Line?s chief executive in mid-January, said the latest change would allow the company to reduce its Asia to Europe capacity and operate its ships closer to full, without giving up the market share it has won.

?We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability,? Mr Skou said.

Maersk Line should still be able to handle the same number of containers and offer the same choice of departures after the change because of a new deal to buy space on some Asia to Europe services operated by France?s CMA CGM.

Last year?s surge of new capacity from Maersk Line helped to prompt the alliance announced in December between Switzerland?s Mediterranean Shipping Company and CMA CGM, operators of the world?s second and third-largest container ship fleets, respectively.

Two older shipping alliances – the New World Alliance and Grand Alliance – agreed in December to merge into the A6 Alliance.

The former container line senior executive said Maersk Line?s latest move showed that the Daily Maersk, which had been meant to be a ?game changer?, had been ?nothing of the sort?.

?Everybody else just got together [in new alliances] and changed the game as well,? he said.

Container traffic between Asia and Europe is projected to grow just 1.5 per cent this year – against 2.8 per cent in 2011 – but ship capacity on the route is projected to grow 8.3 per cent. That mix will push down rates if no capacity is withdrawn.

Maersk Line also announced it would not be exercising options to order a further 10 of its new triple-E class ships – which will be the biggest-ever container ships – beyond the 20 already ordered.