Container boom just a blip, says Maersk boss
Lines unlikely to be tempted into bringing back laid-up tonnage
The “mini-boom” in container volumes in December and January was a blip and shipping lines will not re-introduce vessels into service in large numbers on the back of it, according to AP Møller-Maersk CEO Nils Andersen.
He said the sharp increase in volumes was down to shippers rebuilding inventories that had been run down during 2009. As a result, it was unlikely that carriers would re-introduce laid-up ships.
“We had a mini-boom in the container business,” he said. “Our customers have told us that this is mainly down to a correction of inventory.
“Last year, inventories came down so far that in many cases replenishment was needed, so it’s probably not an ongoing tendency.”
Anderson added: “The most important thing is that the rates that we see in the market today are still not good enough to justify an expansion of capacity. In general, you do not have the incentive to introduce more ships into the fleet.
“On top of that, we assume the market will not continue at January/December levels, and you need months of security before you take in additional capacity.”
He expected global container rates would be higher this year than last year, although the supply-demand situation that governed rates remained clear.
“We assume that both customers and the lines have learnt from the bad situation we had in 2009 and we think that will put some discipline into the lines.
“We also expect that customers will have an understanding that an industry losing US$20-30bn in a year cannot be expected to uphold satisfactory service.
“So we expect the rate situation to be significantly better than last year, but not good enough to give an acceptable rate of return to the business.”
If carriers did manage to maintain their discipline, the number of vessels that are laid up would increase, because vessel supply is predicted to grow more than demand, he said.
“Looking at 2010, we expect fleet growth of 7-10% but we expect slow steaming to take out a little more capacity next year because slow steaming has grown in popularity.
“And given a demand growth of 3-5%, the number of idle ships will actually increase a little bit.”
Andersen said that last year operational capacity had increased by less than expected, around 2%, thanks to vessel lay ups and slow-steaming initiatives.
He said the sharp increase in volumes was down to shippers rebuilding inventories that had been run down during 2009. As a result, it was unlikely that carriers would re-introduce laid-up ships.
“We had a mini-boom in the container business,” he said. “Our customers have told us that this is mainly down to a correction of inventory.
“Last year, inventories came down so far that in many cases replenishment was needed, so it’s probably not an ongoing tendency.”
Anderson added: “The most important thing is that the rates that we see in the market today are still not good enough to justify an expansion of capacity. In general, you do not have the incentive to introduce more ships into the fleet.
“On top of that, we assume the market will not continue at January/December levels, and you need months of security before you take in additional capacity.”
He expected global container rates would be higher this year than last year, although the supply-demand situation that governed rates remained clear.
“We assume that both customers and the lines have learnt from the bad situation we had in 2009 and we think that will put some discipline into the lines.
“We also expect that customers will have an understanding that an industry losing US$20-30bn in a year cannot be expected to uphold satisfactory service.
“So we expect the rate situation to be significantly better than last year, but not good enough to give an acceptable rate of return to the business.”
If carriers did manage to maintain their discipline, the number of vessels that are laid up would increase, because vessel supply is predicted to grow more than demand, he said.
“Looking at 2010, we expect fleet growth of 7-10% but we expect slow steaming to take out a little more capacity next year because slow steaming has grown in popularity.
“And given a demand growth of 3-5%, the number of idle ships will actually increase a little bit.”
Andersen said that last year operational capacity had increased by less than expected, around 2%, thanks to vessel lay ups and slow-steaming initiatives.
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