Maersk Line: No Need for New Capacity for 2-3 Years

Maersk North Asia leader Tim Smith said the company must keep capacity down

Maersk Line sees the potential for better results in 2013 than in 2012, but the major container shipping company does not plan to add more ships, arguing the industry has no need for new capacity for the next couple of years, Reuters reports.

"We don't want to do anything to undermine the fragile supply and demand balance," said the company's North Asia head, Tim Smith.

The company, the largest division of Denmark-based A.P. Moeller-Maersk, predicts a 4 to 5 percent increase in volume on Asia-Europe routes and a 5 to 6 percent jump in Asia-U.S. traffic.

Still, given the oversupply of vessels in the market, and predicted growth in tonnage that will outpace shipping demand, Smith said Maersk Line may have to remove some ships from service.

The company cut its Asia-Europe capacity 21 percent in 20012 before bringing some ships back to the routes in December, and Smith said it may have to reduce capacity there again in the first quarter since Asia-Europe trade is likely to decline for seasonal reasons.

Maersk has 20 "triple E" container ships with capacity of 18,000 twenty-foot equivalent units (TEU) already scheduled to come on stream for the Asia-Europe route between July 2013 and 2015, and Smith said its current fleet and order book will be enough to meet demand for the next two to three years.

"When we bring in these bigger ships, we will take other ships out in order to make sure that overall we don't put more capacity into the trade than we need," he said.

After four straight quarters of losses, Maersk Line made a profit in the third quarter, largely due to rate hikes and cost-cutting efforts.

Company officials have said restructuring rates is a crucial goal.