Maersk Line: East-West Trades Will Remain Challenging as Overcapacity Continues to Drive Down Freight Rates

Maersk Line's East-West network offering is expanding as 2M launches

• UPDATE 1 - Corrected period of outlook from "2015" to "long-term"

Maersk Line has predicted that long-term freight rates will remain under pressure in the East-West box markets as overcapacity continues to feature on key routes, Malaysian media reports.

"We foresee that freight rates generally will continue to be on a downward trend due to continued overcapacity," Dan Lauritzen, Maersk Line Manager for Malaysia, Singapore, and Brunei, told Malaysia's StarBizWeek.

"The main East-West trades will remain challenging, but it is likely there will be significant capacity deployed on the East-West trade due to its continued importance."

"Of course this does not mean that freight rates cannot fluctuate in the short to medium term," he added.

In December Maersk Line announced a general rate increase on eastbound transpacific cargoes.

But one port operator's CEO said many exporter-importers arranged long term freight contracts to help protect themselves from such fluctuations.

According to the report, Morgan Stanley recently said lower bunker prices would benefit the sector in 2015, but Lauritzen said Maersk Line had made significant downward revisions to its bunker surcharges, benefiting customers.

Maersk Line has previously said it will pass on bunker savings to customers, rather than profiting from lower bunker prices.

It is also reported to be in the process of launching major upgrades to its East-West network of ports connecting Asia with Europe and North America as its 2M alliance with Mediterranean Shipping Co. (MSC) gets underway.

This month the 2M alliance was officially launched as the Munkebo Maersk left Dalian in China.