Peter T. Leach, Senior Editor | Jun 07, 2012 10:10AM EDT
Container freight rates are profitable again and could rise further if trade picks up over the summer, A.P. Moller-Maersk CEO Nils Smedegaard Andersen said on Thursday.
"At the moment, freight rates are at a level where container transport is earning money," Andersen said in a presentation to the Danish Society of Financial Analysts reported by Reuters.
"We are still working to get higher rates," Andersen said. "We hope there will be a pick-up in world trade after the summer."
But he also said the oversupply of vessel capacity would persist for several more years. We think there will be overcapacity in container shipping until 2016-17," he said.
Andersen’s comments reflect a rising optimism among container shipping lines that they have been able to limit capacity enough to sustain their rate increases on the major east-west trade lanes.
Almost every carrier reported losses for the first quarter, including CMA CGM, which said Wednesday it will turn profitable for the year as a whole.
Separately, Maersk Line said Thursday it plans to apply a series of general rate increases on major trade lanes nest month.
When Maersk Line reported a first-quarter loss of $599 million on May 16, it upgraded its forecast for the year up to "neutral” from a loss guidance in February on the assumption rate hikes since March will continue through the year.
Andersen said last month in the company's first-quarter results presentation that he hoped Maersk Line would get into positive territory this year, but that would require higher freight rates.
Andersen said Maersk Line had the fleet capacity it needed to maintain its market share and did not plan to buy more vessels.
Maersk Line has said its global container shipping market share was 15.5 percent in 2011 and it had 17.8 percent of the market on Asia-Europe routes.
"With the capacity we have, we are well-equipped for the next years," Andersen said. “At some point, we will go out and order containers, but we have no plans to go out and buy ships."
"We have roughly the ship capacity that's needed to maintain our market share in the next five years," he said.
Contact Peter T. Leach at pleach@joc.com.
