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Maersk wants more market share on imports to China

2010-11-16 11:06

Maersk wants more market share on imports to China

A Maersk container ship passes another ship as it leaves Hong Kong. The shipping company expects to see a continuous rise in freight demand in Asia, Latin America and Africa for next year. [Bloomberg]

Shipments are expected to pick up due to rising demand in Asia

BEIJING - Maersk Line, the world's largest container carrier, wants a larger share of shipments generated from imports to China as the country's economic growth pattern translates to stronger domestic demand.

"We will put more sales and customer service staff in the import market, and take vessel and port rotation for better connection with imports," Tim Smith, chief executive officer for the Copenhagen-based shipping line's North Asia region, said in an exclusive interview in Beijing on Monday.

"This is very much linked to the intra-Asia market because a lot of China's imports come from different parts of Asia. China imports raw materials or partly processed goods, assembles them and sends them for export. So we are trying to combine the intra-Asia imports with exports."

Maersk wants more market share on imports to China

Tim Smith,chief executive officer of Maersk Line North Asia

The transported volume related to China increased by more than 10 percent, 3 percentage points higher than the global gain, contributing 25 percent of the company's global volume and 35 percent of its total export volume.

"We've seen a development in the import market in China that will help the overall demand. We are looking at that very closely," he said.

In the first nine months this year, Maersk Line witnessed a dramatic upturn from its 2009 historic loss of $2.1 million to a profit of nearly $2.3 million, thanks to a 34 percent year-on-year increase in average freight rates, 7 percent increase in transported volume and substantial savings per unit.

Smith, a 25-year veteran of the shipping industry, describes the business situation in 2010 as "strange" following unpredictable growth patterns quarter-on-quarter.

The second quarter this year saw strong growth followed by unexpected average growth in the third quarter, and a slight decrease in the fourth quarter, which is unusual due to the annual expected year-end seasonal demand.

"We've been surprised how quickly it has improved. The situation in 2010 is a little bit better than the normal level. 2011 is not necessarily as good as this year as demand may slow, and we have to carefully monitor the demand and supply situation," he said.

Although the recovery of mature markets such as Europe and US is still not strong enough, robust economic growth in emerging markets will spur further grounds for optimism, said Smith, estimating a global demand growth of 8 percent next year compared to 2010.

"It won't necessarily be a consistent growth month-by-month, but may go up and down a little bit," he said.

Volume on transatlantic routes increased by 3 percent year-on-year in the first nine months this year, while volumes rose by 7 percent on transpacific routes and 16 percent on Latin America and Oceania routes.

He expected a continuous rise of freight demand in Asia, Latin America and Africa for next year. For the increasing container freight capacity, which would affect freight rates, he predicted a 10 to 12 percent year-on-year capacity growth as more new ships are delivered to owners in 2011.

He said it is difficult to predict how much freight rates will increase in the future but based on current levels, the company expects to see good profit ahead.

Revenue of its parent, A.P. Moller, Maersk Group, increased by 17 percent year-on-year to $41.4 billion in the first nine months of 2010, primarily as a result of higher freight rates for its container shipping activities and higher oil prices, the group said in an interim report released on Nov 10.

For the same period, the group reported a net profit of $4.2 billion against a historic loss of $1 billion in 2009.

The group lifted its expectation for a full-year profit from $4 billion to $5 billion despite cautioning seasonal decline in both volumes and freight rates for the container activities towards the end of the year.

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