Container shipping markets have been more active than expected in early 2010, but that is apparently linked to restocking and activity is likely to taper off, the head of A.P. Moller-Maersk said.

Chief Executive Nils Smedegaard Andersen told Reuters in an interview
that freight rates have recovered gradually from a bottom hit around
May 2009.

“We are still not at a level where the industry is really making decent
returns, but at least we are getting into a territory that is
acceptable,” Andersen said.

The global economic downturn hit shipping markets hard and knocked
volumes and freight rates hard. Maersk lost 3.86 billion crowns ($711
million) in the first nine months of last year.

“We do see some better activity than expected here in the first months
(of 2010), and we assume it is repositioning of stock,” Andersen.

“It seems we’ve had a good start to the year,” Andersen said, referring
to the container market, but added: “We don’t believe it will last
through the year, once the restocking is over — or stock levels
stabilise.”

Maersk Line, which operates 15 percent of the world’s container tonnage
and has 500 boxships, is seen as a barometer of world trade, but
Andersen said what happens on the high street is the real leading
indicator.

“We do not really see any reason to expect a major pickup in
consumption, neither in Europe, nor in the United States, so we are not
overly optimistic on volume growth this year,” he said.

Andersen declined to give an outlook for the group’s results this year
ahead of A.P. Moller-Maersk’s fourth-quarter and full-year 2009
earnings report due on March 4.

“It is a cyclical business, so it will depend what happens in the
global economy,” Andersen said in his corner office overlooking
Copenhagen harbour.

PERSISTENT OVERCAPACITY

“We also know there will be overcapacity for some years to come, unless
the economy picks up more rapidly than we think,” Andersen said. “But
if we are a superior operator and give the best customer service, we
think we can run a reasonable business.”

Andersen said he did not think freight rates could sink back to the low levels seen last year.

“You can never say never, but I really don’t believe so,” he said.
“2009 was a terrible year for all the container lines, and a lot of
competitors needed to resort to state money and restructuring with
banks to survive.”

“I assume we have all learned from that. You simply cannot operate below operating costs for long,” Andersen said.

“Even though there is a lot of capacity, we think that rates will stay in more reasonable territory.”

He said he hoped the industry had learned some discipline, and added that Maersk itself had not “over-ordered” new vessels.

“We have an orderbook that is equal to about 20 percent of our tonnage,
and that is to be delivered over the next three to four years,”
Andersen said. “That is probably more or less in line with the market
growth we can expect — maybe four, five six percent per year,
something in that range.”

Andersen said that acquisitions were not a high on the agenda for
Maersk, which will look to invest further in its oil and port terminals
business and to pick up distressed assets.

He also said that Maersk would likely to raise money in the bond market
again this year after two successful debut bond issues last year to
diversity the group’s funding.

“I find it likely that we’ll come out with further bond issues this
year, but we’ll simply look at what’s most favourable to us,” Andersen
said.

Source: Reuters

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