A.P. Moeller-Maersk A/S said its container-shipping line, the world’s largest, can cut more costs amid declining freight rates in a number of ways, including by further slowing vessel speeds.
In addition, Maersk Line’s partnership with Mediterranean Shipping which is still pending authority approval, will result in $350million annual savings, Copenhagen-based Maersk said today in a presentation.
Maersk Line, which transports about 15 percent of the world’s containers, has been battling industry overcapacity. A boom in ship orders, coinciding with the global recession, triggered the worst price slump since containerization spread in the 1970s. The unit has been cutting costs to beat the industry’s average profitability and on 19 August raised its profit forecast for 2014.
“The current supply/demand gap is expected to remain constant in the near term,” Maersk said in a copy of the presentation. “We expect a long-term trend of declining rates.”
Maersk said in July it will start the partnership with Geneva-based MSC after a planned venture, which also included Marseilles, France-based CMA CGM SA, was blocked by competition authorities.
Global container shipping demand will rise 4 percent to 6 percent in 2015 and increase in the same range in 2016, the company said. The industry’s vessel-capacity growth will be 7 percent next year and 4% to 6% in 2016, it said.
Maersk also said its oil unit will maintain a target of increasing daily production to 400,000 barrels of oil by 2020 from more than 240,000 barrels estimated this year, “subject to profitable terms.” The company has seen progress on “key projects” to meet the target.
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