Tuesday , 28 January 2020
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Maersk Line plans to raise its Latin American shipping rates by as much as 30% this year to staunch losses and to pay for 16 ships being built for the region, the company has said. The decision follows Maersk's struggles to recover from the world economic downturn.

Maersk to hike Latin American shipping rates

The cost of fuel for the company’s ships has tripled in the last five years while shipping rates have fallen by 10%, leading to quarterly losses or slim profits, Robbert Jan van Trooijen, the company’s CEO for Latin America, told Reuters. Without higher freight rates it would be difficult to recoup the company’s US$2.2bn investment in 16 container ships for its Latin America service, he said.

Maersk has raised its 2012 profit outlook but says its performance will still fall below 2011 levels. The company is looking to Latin America to help reverse its recent financial difficulties and to pay for other large investments in the region, Van Trooijen said.

Latin America accounts for around 14% of the world’s container trade and Maersk has some 15% of the region’s market. Brazil represents approximately 20% of Maersk Line’s Latin American business.

“The ports in Brazil still have a long way to go before they become competitive,” Van Trooijen added. “Ideally, a container should move through a port in 12 hours at most. In Brazil, the average is 14 days.”

This, he said, has more to do with bureaucracy and customs-clearance activities in the so-called back yards rather than service at the docks, an area controlled by Maersk’s logistics department. Even where the docks are modern and efficient, ports in Brazil remain too small for Maersk’s largest and most efficient ships.

The SAMMAX vessels being built for Latin America, while among the largest to visit Brazilian ports, have half the carrying capacity of Maersk’s biggest ships that service Asian, North American and European ports, he said.