World News
Maersk to Raise Rates 10-11%, Drop Ship Speed, Capacity
Faced with weak global trading, particularly from Asia to Europe, A.P. Moller-Maersk (Maersk) is reducing its capacity, raising shipping rates, and slowing ship speeds for its Maersk Line business, the Wall Street Journal reports.
"It is loss-generating to sail Asia-Europe at the moment, and therefore it is crucial for those in the market that the rates are raised," Maersk CEO Nils S. Anderson said.
"There is no need for the number of ships currently sailing, so it is only natural that we consider reducing the capacity."
Market rates on Asia-Europe routes, which account for 40 percent of Maersk Line's revenue, have fallen 30 percent since the beginning of August, and are now below the cost of operating vessels on the routes.
The company already cut capacity on the routes by 9 percent at the start of the year, and Anderson did not say how much of a further reduction it plans, but he said rates will rise by 10 to 11 percent starting November 1, 2012.
After Maersk Line's capacity reduction, rates rose in the first half of the year, but weaker-than-expected trade volume pushed them down over the past two months.
The head of the Danish shipping giant has previously said he rejects getting involved in a rate war because margins in the business are low to negative.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 624.50 | 1.00 | 732.00 | 8.50 |
| Rotterdam | 571.00 | 3.00 | 758.00 | 16.50 |
| Houston | 591.50 | 4.00 | 760.00 | 5.50 |
| Fujairah | 629.00 | 0.50 | 877.50 | 3.00 |
| Global 20 Ports Average | 637.00 | 0.00 | 819.00 | 3.00 |
| Global 4 Ports Average | 604.00 | 0.00 | 782.00 | 5.50 |
| Global Average Bunker Price | 688.00 | 2.50 | 879.00 | 1.00 |
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