Maersk Line battling with the overcapacity

By Finance

Soren Skou, Maersk Line Chief Executive said, the industry will be with overcapacity in five years time from now. The world's biggest container shipping company, Maersk Line, can't create demand by lower prices.

Soren Skou doesn't see easy way to solve the problem, but he thinks that removing the capacity is important.

Up to 15 percent of world container shipping capacity are made by Maersk Line vessels. They are part of the global trade leader in the industry - AP Moeller-Maersk Group.

The problem with the overcapacity started with the financial crisis in 2008. The orders of the global trade and shipping companies dropped to 50% of their previous and the market was flooded. The battle against the overcapacity in the shipping industry started since then.

That overcapacity led to spot rates decreasing on the main routes between Northern Europe and Asia.

AP Moeller-Maersk Group managed to reduce 12,7% of the total cost per container to cope with the new difficult market situation in the second quarter compared to the previous year.

Maersk Line Chief Executive also thinks that the situation before the crisis when the orders for containers were growing more than 10% a year will not return.

Soren Skou believes that the shipping industry will be more related to the growth in the global economic and for 2013 he expects 2-3 percent increasing of containers demand.

Last week, the short-term target of profitability for Maersk line has been lowered from 10 to 8.5 percents per year at the group's capital markets by parent A.P. Moller-Maersk Group, the long-term was kept at 10 percent.