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  21st July 2008 - STAR MARITIME

Container shipping growing

MAERSK Line, the world's largest container shipping firm, expects container shipping to grow 7% to 8% globally this year, with trade within Asia outperforming that, in spite of soaring fuel costs and a slowing world economy.

Its Asia Pacific chief executive Jesper Praestensgaard said intra-Asia trade was growing relatively more than between the regions, so Asia was probably more shielded from a downturn in the US and Europe.

He added that the firm would introduce a new China-Singapore service from next week to tap growing demand.

Maersk Line, part of Danish shipping and oil group A.P. MollerMaersk, now operates over 500 container vessels and 1.9 million containers.

Since June it has ordered 34 new ships for delivery by 2012, amid concerns of an impending oversupply in shipping capacity worldwide.

“Shipping is cyclical, everyone knows that. So when we make investments in shipping, we invest in ships with lifespan of 25 to 30 years, and you have to measure success over that lifespan,” said Praestensgaard.

Soaring bunker fuel prices, now at over US$750 per tonne, up from about US$500 in January, represents over 50% of the firm's operating costs, and has had a significant impact on margins, he said.

Maersk's biggest container ships, at full capacity, can consume an estimated 46,200 litres of fuel for every 100 km.

Maersk Line partially offsets its fuel costs by imposing a bunker adjustment charge on customers, fuel hedging, and the practice of “slow steaming”, where shippers operate vessels at slower speeds to cut fuel consumption and make up for it by increasing the number of ships on a route.

“There is no doubt that the current oil prices is hindering global trade, both in terms of reducing consumption and increasing transportation costs in general,” he said.

On mergers and consolidation, Praestensgaard said, the potential merger between Singapore-controlled Neptune Orient Lines (NOL) and HapagLloyd, the container unit of Germany's TUI AG, could be good for the industry that was now overly fragmented.

He declined to comment on Maerk's own interest in the German shipper, but Maersk Line global CEO Eivind Kolding told a German newspaper last month that he was not ruling out takeovers and was keeping a close eye on HapagLloyd.

Maersk Line had shocked Singapore authorities when it decided in 2000 to take a 30% stake in Port of Tanjung Pelepas (PTP) and shift most of its operations there, threatening PSA Singapore Terminal dominance in the region.

“The market demand was to be in Singapore as well, so that's why we're here too,” he said, adding that more of Maerk Line's operations were still based in PTP compared to PSA at this point, but declined to give specifics. – Reuters


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