Maersk North Asia CEO expects hard bargaining before higher rates stick

2012 03 01


OCEAN carrier rate increases will result in hard bargaining because excess capacity in the market has given shippers more options, said Maersk Line north Asia CEO Tim Smith.

Having announced Asia Europe capacity cuts of nine per cent, Maersk is now looking at other trade lanes where more capacity could be cut. "There has been no decision yet, but I suspect there will cuts as time goes on," he told a Hong Kong press conference yesterday.

Maersk Line faces a tough year ahead in its drive to restore profitability, Mr Smith said, even expressing doubts that it could be attained this year after the group suffered a US$600 million loss in 2011 - and the "worse quarter I have ever experienced".

The problem, he told journalists, was that while volumes were up 10 per cent and revenue was increased seven per cent, freight rates declined eight per cent and bunker costs rocketed up 35 per cent. "When combined, that means loss," he said.

Henriette Hallberg Thygesen, head of Damco in North Asia, told the gathering of Maersk's forwarding arm expansion into central and western China with offices opening up in several places in including major centres such as Wuhan and Chengdu.

Asked why forwarding appeared to be the only field in shipping where women played such dominant roles (Panalpina and TNT have female CEOs), Ms Hallberg Thygesen said the reason was likely because logistics is "people-intensive" and its rapid growth attracted a more diverse talent pool than usually found in more traditional sectors of shipping.

The controversial Daily Maersk service was doing well, said David Skov, recently appointed head of Maersk Line in south China. He also said the company's "conveyor belt" concept, the core of the Daily Maersk scheme, had contributed to making poor results better than they would have been, rather than to blame for the short fall as one journalist suggested.

Mr Skov also said Daily Maersk was one of the brighter spots in the company's dismal container trade. "We have had 90 per cent utilisation and 98 per cent reliability. And that's very good," Mr Skov said.

Mr Smith assured journalists that the company was not driving for greater market share despite charges to the contrary.

Rival shipping giants thought so, and combined forces, offering co-ordinated services to match the economies of scale promoted by Maersk. One such combination, the association of Marseilles' CMA CGM and Geneva's MSC, provides more tonnage than the leading carrier.

"We anticipated ways in which the market would react but there were ways in which it reacted that we did not anticipate," said Mr Skov, who recently took up his post after working 10 years as an Maersk executive in Nigeria.

Source Shipping Gazette - Daily Shipping News
 

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