Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

INTERVIEW-UPDATE 1-Maersk sees slow shipping recovery

Published 02/08/2010, 04:01 AM
Updated 02/08/2010, 04:06 AM

* CEO Andersen said brisk early 2010 market likely temporary

* Freight rates getting back to acceptable territory

* Maersk's ship orderbook is in line with market growth

* Acquisitions not high on agenda

* Likely to issue more bonds in 2010

By Peter Levring and John Acher

COPENHAGEN, Feb 8 (Reuters) - Container shipping markets have been more active than expected in early 2010, but that is apparently linked to restocking and activity is likely to taper off, the head of A.P. Moller-Maersk said.

Chief Executive Nils Smedegaard Andersen told Reuters in an interview on Friday that freight rates have recovered gradually from a bottom hit around May 2009.

"We are still not at a level where the industry is really making decent returns, but at least we are getting into a territory that is acceptable," Andersen said.

The global economic downturn hit shipping markets hard and knocked volumes and freight rates hard. Maersk lost 3.86 billion crowns ($711 million) in the first nine months of last year.

"We do see some better activity than expected here in the first months (of 2010), and we assume it is repositioning of stock," Andersen.

"It seems we've had a good start to the year," Andersen said, referring to the container market, but added: "We don't believe it will last through the year, once the restocking is over -- or stock levels stabilise."

Maersk Line, which operates 15 percent of the world's container tonnage and has 500 boxships, is seen as a barometer of world trade, but Andersen said what happens on the high street is the real leading indicator.

"We do not really see any reason to expect a major pickup in consumption, neither in Europe, nor in the United States, so we are not overly optimistic on volume growth this year," he said.

Andersen declined to give an outlook for the group's results this year ahead of A.P. Moller-Maersk's fourth-quarter and full-year 2009 earnings report due on March 4.

"It is a cyclical business, so it will depend what happens in the global economy," Andersen said in his corner office overlooking Copenhagen harbour.

PERSISTENT OVERCAPACITY

"We also know there will be overcapacity for some years to come, unless the economy picks up more rapidly than we think," Andersen said. "But if we are a superior operator and give the best customer service, we think we can run a reasonable business."

Andersen said he did not think freight rates could sink back to the low levels seen last year.

"You can never say never, but I really don't believe so," he said. "2009 was a terrible year for all the container lines, and a lot of competitors needed to resort to state money and restructuring with banks to survive."

"I assume we have all learned from that. You simply cannot operate below operating costs for long," Andersen said.

"Even though there is a lot of capacity, we think that rates will stay in more reasonable territory."

He said he hoped the industry had learned some discipline, and added that Maersk itself had not "over-ordered" new vessels.

"We have an orderbook that is equal to about 20 percent of our tonnage, and that is to be delivered over the next three to four years," Andersen said. "That is probably more or less in line with the market growth we can expect -- maybe four, five six percent per year, something in that range."

Andersen said that acquisitions were not a high on the agenda for Maersk, which will look to invest further in its oil and port terminals business and to pick up distressed assets.

He also said that Maersk would likely to raise money in the bond market again this year after two successful debut bond issues last year to diversity the group's funding.

"I find it likely that we'll come out with further bond issues this year, but we'll simply look at what's most favourable to us," Andersen said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.