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Container shipping demand to grow, rates to be on slight decline: Maersk

Container shipping demand to grow, rates to be on slight decline: Maersk
Container shipping demand is projected to grow 3-5% this year over 2014, but freight rates are expected to be on a slight decline, according to Lars Mikael Jensen, chief executive of Asia Pacific region at Maersk Line.

On the supply side, growth is anticipated at 5-7%, putting demand and supply growth close to the same pace for the rest of this year and possibly into 2016 as well, Jensen said.

“We are looking at a demand growth of 3-5% in 2015; it is still a healthy growth and obviously differing from trade to trade,” he told Seatrade Global, adding that container trades in some regions like West Africa and South America have been impacted by oil price fluctuations.

Maersk Line has also observed an overall trend that the average revenue per box is declining amid the rate fluctuations seen in some trades, due mainly to the supply-demand situation.

“We are working in a scenario that there will not be a massive upward return of the average revenue per box. We do believe that rates will continue to fluctuate and the general trend is going to be slightly down, and that is the scenario that we always work on – so cost savings and efficiencies are important,” Jensen said.

He added that the recent financial results of most lines suggested that revenues are not where they should be, particularly those generated from the east-west trades.

“Structurally there is a need for the average rates on the east-west trades to increase in order to make them profitable and this will depend on the supply and demand situation,” he said.

Meanwhile, Maersk Line had earlier announced plans to invest $3bn a year for up to five years to order new containerships, all of which will likely be more than 10,000 teu each.

“We do need to invest in new ships to keep up with the global growth and to replace the older ships that are coming to the end of their efficient life span,” Jensen explained. “And if the market growth is not there, we will redeliver some of the less energy efficient time-charter ships.”

Lars Mikael Jensen will be speaking at Sea Asia 2015.