Maersk expects rates to return to healthier levels during second half of 2011

In an interview with Hellenic Shipping News Worldwide, Maersk Hellas’ Managing Director, Mrs. Anne O. Gronbjerg, responsible for the Greece Cluster, including Hellas, Cyprus and Bulgaria, confirmed Maersk’s estimates that the second half of 2011 will prove healthier

in terms of rates for the container shipping sector.
She also speaks of the recent huge Triple-E vessels order and the scope behind it, while she analyzes the future of container shipping, through the eyes of the sector’s leading group. In terms of the company’s presence in Hellas, Mrs. Gronbjerg reaffirmed Maersk’s long-term commitment to the market.

Maersk recently set the trend when it comes to modern container vessels with its Triple-E vessels order. Could you give us some feedback on the progress of this order and the scope behind it?

Maersk Line is once again taking the industry lead in building the biggest and best vessel, because it allows us to move the greatest number of containers for our customers in the most energy efficient way and with the smallest CO2 footprint – benefiting both customers and Maersk Line.
As you know, the name “Triple-E” represents Economies of scale, Energy efficiency and Environmentally improved. We are investing in the Triple-E vessel series for future, sustainable growth.
The Triple-E would not exist without the remarkable economic growth of China. And as the world’s second largest economy – the first being USA – continues its growth, the Triple-E will position Maersk Line to meet that growth in the most efficient way possible.
In that scope, the Triple-E vessels will be deployed in the Asia-Europe trade, thereby furthering Maersk Line’s position in the trade. The project is ongoing as scheduled and we have just confirmed orders for an additional 10 vessels, bringing the total order to 20 Triple-E vessels.

Is bigger better when it comes to the future of container shipping?

Triple-E is an investment for sustainable growth. These vessels will be deployed in Asia to Europe trade, where our assessment is that demand will grow by 5-8% 2011-2015. The Triple-E ships will give us a competitive advantage in this perspective, because of their capacity and energy efficiency, so from this aspect we gain from size. On top of that, with the Triple-E’s we maintain our industry leadership in the fields of innovation and carbon emission reductions.

In a separate speech given out by Maersk Line’s CEO, Mr. Eivind Kolding in June, it was said that container shipping needs to completely change its way of thinking. Which is Maersk’s view on the future of the sector?

We have a whole new generation of customers that expect a different kind of service level from all their suppliers. Our customers repeatedly tell us that other buying factors matter to them besides price – such as schedule reliability, money-back guarantees, quick notifications of delays, intuitive self-service wherever possible, and ease of business. They expect that we will serve them on all these parameters.
If we are truly to re-assess where we need to be, we must first realise that the old conversations and ways of working no longer apply. We have to rethink our business focusing on the tremendous value we could add to our customers’ supply chains. We really could be so much more; we must make the industry of tomorrow, today.
The shipping industry is faced with three fundamental challenges: our unreliability, our complexity and our environmental impact. But instead of making excuses we should stop the repair work and see them as fantastic opportunities.
Why shouldn’t we be able to get cargo there on time, every time?
Why shouldn’t we make it easier and give customers instant prices and instant confirmation of their booking?
Why shouldn’t we hold ourselves to the highest environmental standards?
These are the main points of change we will try to bring to the industry.

During the past few months, we’ve been witnessing a surge of newbuilding orders for containers. Are you concerned that the market could once again face a potential oversupply of tonnage?

We have learned from the 2009 global financial crisis and used it to adjust and become more competitive. Compared to our size, we don’t introduce as much new capacity to the market as the average competitor, but unfortunately we don’t see the industry behaving very rationally lately. We do think this is about to change, though, and that rates will return to more sustainable levels, especially in the second half of 2011.

How do you see containerized trade demand shaping up in 2011?

The first signs from 2011 have been as good as expected – no more, no less. At the same time, we see more capacity than needed being introduced in the Asia-Europe trade in the first half of the year and that might put a downward pressure on rates. In general, the market is sending mixed signals and we expect some volatility for the rest of 2011. Most importantly, we are reasonably confident about the development trade volumes towards the end of the year and overall, we do not expect major rate deterioration.

What about demand in the years to come? Are you confident on the world economy’s rebound?

In our assessment, world’s economy recovery will continue, although with great variations.
The emerging markets continue to grow ahead of the mature markets. The US economy is still struggling, but we expect it to continue to grow for the rest of 2011. In Europe there are obvious challenges in several countries, but Germany continues to recover well, based on export, and policy makers seem to be determined to solve the problems that slow down the recovery at the moment.

One of the industry’s hottest topics is shipping emissions and their reduction. Maersk Group has been attempting to be a leader in this domain through various initiatives, not only in terms of vessels’ efficiency. Could you provide us with some more details?

The shipping industry’s carbon footprint, like that of all large-scale transportation industries, is a significant contributor to global levels of CO2. The industry’s total emissions comprise between three and four percent of global emissions ““ higher than the nation of Germany. Furthermore, the growth outlook indicated by the International Maritime Organization (IMO), where the industry is set to grow 400-800 % towards 2050, poses an obvious challenge for both the industry and our customers.
Maersk Line has met our CO2 reduction goal two years ahead of time ““ we achieved our 2020 goal already in 2011. This was no small challenge and to get there we changed our daily operations, made slow steaming permanent and invested in flare reduction. We will set a new CO2 reduction goal by the end of 2011.

Maersk Line recently said that it would launch a sustainable container floor. What advantages and environmental benefits will this move bring forward?

Maersk Line has announced a new policy to refrain from purchasing containers with floors made of uncertified tropical hardwood and we are already following that policy.
As was highlighted recently by Mr. Jacob Sterling, the Head of Climate & Environment for Maersk Line, illegal logging is widely recognized as a serious threat to forests, people and wildlife. That means we feel obliged to use our purchasing power to push for higher standards and ensure that the timber we use for container floors come from responsible forestry.
Traditionally, shipping lines have fitted their containers with tropical hardwood floors. It takes two cubic meters of hardwood to produce floors for three 40 foot containers. The container industry uses approximately 1.2-1.5 million cubic meters of hardwood annually to meet demand for new containers.
As a result of the new policy, all new Maersk Line containers purchased as of January 2011 have floors made of timber from sources employing responsible forestry practices or non-wood alternatives such as bamboo and recycled plastic. Any tropical hardwood used will be certified by the Forest Stewardship Council (FSC). As an interim solution applicable only in 2011, tropical hardwood verified as legally compliant will be accepted while other floor types are scaled up in production.Β 
To date, Maersk Line has purchased 64,000 containers that comply with the new policy. Over the next 5 years, Maersk Line will purchase approx. 3 million containers (TEU), more than doubling its current container fleet. A large percentage of the container fleet will therefore have new alternative floorboards within a relative short time span. Certified floors will be in all Maersk Line containers within 18 years, the typical lifetime of a container.

Maersk has been active in the Hellenic market for some time now. How do you see your future presence here, especially when taking into account the debt crisis and the recession that the local economy has entered?

The A.P. Moller – Maersk Group and her container shipping brands ““ Maersk Line, Safmarine and now also Seago Line ““ is absolutely dedicated to the Hellenic market. We have had own offices here since 1997 and we will continue to serve our Greek customers through those offices, with the best services possible.
We are committed to Greece as a country and as a market, and the current challenges do not change that at all.

How has the crisis affected Maersk Hellas’ activities?

As part of the economic cycle, container shipping activities in Greece have also been affected by the crisis. However we remain confident that there is an opportunity for the whole economy to recover and we believe that Maersk Hellas can play an important role by providing its reliable services to the Greek companies. And to finish on a positive note, we do see that healthy, well-run companies do thrive and grow even at this difficult time for Greece.

Nikos Roussanoglou, Hellenic Shipping News Worldwide