Cargo Business Newswire

Thursday, September 25, 2014

Top Story

Maersk Line ramps up cost cutting to offset low freight rates

As freight rates continue to fall, Maersk Line can deepen its cost cutting through slow sailing, according to parent company A.P. Moeller-Maersk, adding that its prospective vessel-sharing deal with MSC would result in $350 million annual savings.

Handling 15 percent of global container trade, Maersk Line has been fighting industry overcapacity. The carrier has successfully reduced spending this year, besting the industry’s average profitability rate, and in August raised its profit forecast for 2014.

"We will continue to drive out costs and will have a deflationary mind-set," Soeren Skou, chief executive officer at Maersk Line, said in a presentation. He noted that in a market where rates decline, the "lowest costs win," and that the current gap between supply and demand will be "constant in the near term."

The CEO asserts that Maersk Line won’t need to add new ships until 2017, a year later than the company estimated in 2013. It plans to invest $3 billion a year from 2015 to 2019 on new vessels and retrofits as well as adding containers, he said.

According to Maersk, global container shipping demand will rise 4 percent to 6 percent in 2015 and again in 2016, and worldwide vessel capacity will grow 7 percent next year and 4 percent to 6 percent in 2016.

For more of the Business Week story: www.businessweek.com

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