Monday, September 17, 2012
Maersk chief: "Can't afford" price war
Tepid demand due to slow U.S. and European economies are driving shipping rates down, said Nils Andersen, top executive of Danish shipping giant A.P. Moller-Maersk, in an interview on Thursday.
Because Maersk Line's rates are not covering costs on the Asia-to-Europe trade corridor, the industry leader will likely be hiking its rates on that route, said Andersen, and will strive to maintain its market share rather than increase it. He noted shipping rates on most of the world's shipping routes are stabilizing.
Andersen didn't quantify the prospective rate hikes.
"It may be a little new to industrial thinking, but we just can't afford to go into a price war because the general market is going down," he said. "We see the U.S. actually being in recovery ahead of Europe, though that doesn't mean it will return to the glory days. People are worried and there's good reason for that, because the economies are over-leveraged."
Andersen reported that industry shipping volume from Asia to Europe fell by about 8 percent in June and by 14 percent in July. He said the uncertainty in the short-term regarding the economies of the large western nations will weaken growth in developing markets, but added he believed a growing middle class in emerging countries would encourage consumer demand and exports from the U.S. and Europe.
"China is still by far the most important country for manufacturing but a lot of the cheaper textiles have moved out of China or never got there," and are made in other nations, such as India or Bangladesh.
For more of the Reuters story: reuters.com
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