Tuesday , 19 June 2018
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Maersk Line considering more Triple-E vessels

Soren Skou, chief executive of Danish carrier Maersk Line, has suggested that more Triple-E class vessels will be part of the company’s planned ship orders over the next six months.

“Over the next three years, the bulk of the capacity we will be buying is going to be big ships that may include Triple-E size,” Skou told the Wall Street Journal.

He predicted that the demand for shipping will grow by around 4-5% over the next few years, adding “with that growth in demand for global shipping we need 108,000 containers in new capacity a year to stay competitive”.

He went on to say that within five years it will be impossible to stay competitive in the Asia-Europe trades, where most ultra large container ships are deployed, with a ship of 9,000-10,000 teu capacity.

If he is correct, smaller carriers could struggle to stay afloat in the era of 2M, the recently approved alliance of Maersk and MSC, the two largest shipping companies in the world, and Ocean Three, comprised of CMA CGM, UASC and CSCL. The latter pair have both committed to ships of an equivalent size to the Triple-E’s 18,000 teu capacity.

Skou said that the larger ships save the company around 25% of the cost of moving a box from Asia to Europe, assuming the ship sails fully laden. The economies of scale are attractive to carriers and Japan’s Mitsui OSK Lines as well as Taiwan’s Evergreen are also considering giant vessels to ensure they are not left behind.

Maersk recently released its Q3 2014 report, showing that net profit generated by its shipping business rose almost a quarter to US$685m. In light of that performance, the company has raised its full-year outlook by US$500m and now expects profit to exceed US$2bn this year.

Return on invested capital stood at 13.5% compared with 10.9% for the corresponding period last year. Volumes were up 3.7% in line with the market; and the average rate was 0.9% up.

“I am very satisfied with the result,” said Skou. “Our return on invested capital is satisfactory and again above our long-term target of 10%. Our strategy is paying off. We have proven it is the right strategy for us. Now we have to prove it is sustainable in the long term.”

The company also took delivery of three more Triple-E vessels during the quarter.