The container shipping industry must face up to a new era that will see demand growth shrink to half the levels experienced over the past two decades, according to the head of Maersk Line, the world’s largest carrier.
Maersk is adjusting to annual growth of between 4 and 5 percent in the years ahead compared with around 10 percent during the boom period before the 2008 global financial crisis, Maersk Line CEO Søren Skou told the Financial Times.
“I think the reality is that our industry has to get used to lower growth than we had in the past,” said Skou, who had touched on changing conditions during his keynote speech at JOC’s 2013 TPM conference in Long Beach, Calif., in March. At that time, he indicated it was unrealistic to expect container market growth to return to the nearly 10 percent annual average seen from the mid-1970s through 2008.
The slowdown is not just the result of weaker global economic growth but also is occurring because two key trends that changed trade patterns and boosted container shipping are coming to an end.
The “offshoring” of US and European manufacturing production has run its course and in some cases is being reversed.
Second, the containerization of goods that previously were transported by breakbulk and bulk vessels is also drawing to a close.
“Most of the stuff that can go in containers is going in containers today,” Skou said.
Skou declined to say whether he expects regulators to clear the planned P3 Network alliance between Maersk and its two closest rivals, Mediterranean Shipping Co. and CMA CGM, which will account for more than 50 percent of all ships with capacities above 10,000 20-foot-equivalent units.
“We’re going through the process now. We’ll see. A lot of high paid lawyers have told us that it could be done — but we’ll have to find out.”