Maersk Line: We Misjudged the Market When Ordering 20 Triple-E's

Skou said Maersk is looking to the P3 alliance to reduce capacity on Asia-Europe routes

Søren Skou, CEO of Maersk Line, told the Wall Street Journal that it misjudged the container shipping market when it spent $3.7 billion to order 20 Triple-E vessels two years ago.

"It's pretty clear that when we look back to early part of 2011 when these ships were ordered, ours and everybody else's view on growth was somewhat different than what it turned out to be and therefore the market will not be quite as big in 2015 as we thought it to be," he said.

Capacity on Asia-to-Europe routes, where the 18,000 twenty-foot equivalent (TEU) Triple-E ships are being deployed, is about 10 percent over demand, and rates for the route have fallen about 30 percent this year as small shipowners dropped their prices to win market share.

Big companies including Maersk Line failed in an effort to raise rates by $500 per container this summer.

The new P3 cargo sharing alliance of Maersk Line, CMA CGM, and Mediterranean Shipping Co. (MSC) represents a new effort to cut costs and reduce capacity, dropping the number of ships on Asia-Europe routes.

"We expect to reduce annual costs 8% [with P3] and increase capacity by 6% by deploying fewer but bigger ships," Mr. Skou said.

"P3 partners now deploy 300 ships in Asia-Europe, but once the agreement is ratified the number will be cut to 250 in one go, resulting in significant savings, which we'll benefit immediately."

Maersk Line Chief Operations Officer Morten Engelstoft recently said that fuel-efficient technology, including the fuel-saving Triple-E ships, has a "very attractive payback."