Maersk Line expects to launch a first full Asia-Europe service deploying only Triple-E class containerships by the middle of next year, even though demand remains its top concern.
The Danish liner is due to take delivery of 20 of the 18,000teu vessels, which will be the world’s largest boxships when they hit water, from Daewoo Shipbuilding & Marine Engineering.
The vessels are due to be delivered at intervals of four to six weeks over two and a half years starting in June, giving Maersk “enough [of them] for a full Asia-Europe stream by mid-2014”, said Maersk head of Far East Asia liner operations cluster Brian Noe Kristensen.
“We will have a self-sustained stream of 10-12 vessels before then,” Kristensen told Lloyd’s List.
However, the world’s largest container shipping line is still debating the fine detail of such a service, fearing that extra capacity could depress rates in the fragile Asia-Europe trades.
“We have not decided what the end game will be for Triple-E,” Kristensen said. “We will need to do it in a market-sensitive way.”
Maersk officials have repeatedly emphasised that the carrier will manage new deliveries carefully and will not expand capacity in Asia-Europe trades before market conditions recover.
The Asia-Europe trades, the most important deepsea trades for box operators, have been plagued by overcapacity and weak European demand.
Headhaul volumes on this route fell 4% to 13.6 million teu last year, according to Clarksons, although backhaul volumes improved to 6.6m teu from the 2011 level of 6.3 million teu.
“We need to find a time when the market is growing so we can add capacity,” Kristensen said.
Maersk will deploy its first 18,000teu vessels on the AE-10 service, which currently operates mainly E-class, 15,500teu boxships.
Kristensen admitted there would be “uneven” capacity early on.
“We don’t actually expect to fill [the Triple-E class ships] in the beginning,” he said. “We are trying not to inject more capacity into the market.”
However, Maersk anticipates few issues on the operational side when it comes to running the giant boxships alongside smaller peers within the same service.
Compared with the E-class vessels, the 18,000teu ships might need an extra two hours at ports in Asia, at most.
“That doesn’t really make any difference,” Kristensen said. “Basically we have the same speed [for them] as we have for the E class.”
The AE-10 service usually calls at Gwangyang, Ningbo, Shanghai, Yantian, Tanjung Pelepas, Suez Canal, Rotterdam, Bremerhaven, Gdansk, Aarhus and Gothenburg.
Although the 18,000teu ships may call at Nansha and Xiamen later, this is unlikely during the initial period, Kristensen said, even though the former offered the technical capability and the latter offered cost advantages.
Numerous boxships that are 8,000teu or larger will be delivered this year and next, which weighs heavily on market sentiment.
According to Lloyd’s List Intelligence, 106 post-panamax ships of 1.2 million teu will hit the water this year and 97 vessels totalling 1.1 million teu next year.
At the end of last year, the world box fleet on the water comprised 453 ships of this size, at 4.6 million teu.
Although the large new tonnage will be deployed on deepsea trades, particularly on the Asia-Europe route, Kristensen believes that capacity adjustments could offset the impact on rates.
He expects major liners to cascade panamax vessels to the buoyant intra-Asia trades – and that gives cause for new concern that rates on these trades will hit rock bottom.
“There will be no rate war in big trades in the foreseeable future, but I do see them in emerging-Asia trades,” predicted Kristensen.
The intra-Asia trades were among the few bright spots in the liner industry last year, delivering annual volume growth of 8.1%, according to Clarksons.
Maersk’s intra-Asia business, operated by its subsidiary MCC Transport, achieved a 6% gain in rates and a 19% jump in volumes last year.
Industry sources fear that because the main ports in Southeast Asia can handle panamax ships, regional players will slash their rates to fill their ships.
“If a liner got 10 panamax vessels [cascaded out from main routes] and cannot redeliver them, it can give them to its intra-Asian guys,” Kristensen said. “The costs are sunk, so they can just make the best use of them.
“Their main task would be to fill them.”
That, undoubtedly, will squeeze margins in intra-Asia trade despite the region’s expanding economies driving strong volume growth.
“It will still be a growth area for volumes, but not for rates,” Kristensen said.
The Danish liner is due to take delivery of 20 of the 18,000teu vessels, which will be the world’s largest boxships when they hit water, from Daewoo Shipbuilding & Marine Engineering.
The vessels are due to be delivered at intervals of four to six weeks over two and a half years starting in June, giving Maersk “enough [of them] for a full Asia-Europe stream by mid-2014”, said Maersk head of Far East Asia liner operations cluster Brian Noe Kristensen.
“We will have a self-sustained stream of 10-12 vessels before then,” Kristensen told Lloyd’s List.
However, the world’s largest container shipping line is still debating the fine detail of such a service, fearing that extra capacity could depress rates in the fragile Asia-Europe trades.
“We have not decided what the end game will be for Triple-E,” Kristensen said. “We will need to do it in a market-sensitive way.”
Maersk officials have repeatedly emphasised that the carrier will manage new deliveries carefully and will not expand capacity in Asia-Europe trades before market conditions recover.
The Asia-Europe trades, the most important deepsea trades for box operators, have been plagued by overcapacity and weak European demand.
Headhaul volumes on this route fell 4% to 13.6 million teu last year, according to Clarksons, although backhaul volumes improved to 6.6m teu from the 2011 level of 6.3 million teu.
“We need to find a time when the market is growing so we can add capacity,” Kristensen said.
Maersk will deploy its first 18,000teu vessels on the AE-10 service, which currently operates mainly E-class, 15,500teu boxships.
Kristensen admitted there would be “uneven” capacity early on.
“We don’t actually expect to fill [the Triple-E class ships] in the beginning,” he said. “We are trying not to inject more capacity into the market.”
However, Maersk anticipates few issues on the operational side when it comes to running the giant boxships alongside smaller peers within the same service.
Compared with the E-class vessels, the 18,000teu ships might need an extra two hours at ports in Asia, at most.
“That doesn’t really make any difference,” Kristensen said. “Basically we have the same speed [for them] as we have for the E class.”
The AE-10 service usually calls at Gwangyang, Ningbo, Shanghai, Yantian, Tanjung Pelepas, Suez Canal, Rotterdam, Bremerhaven, Gdansk, Aarhus and Gothenburg.
Although the 18,000teu ships may call at Nansha and Xiamen later, this is unlikely during the initial period, Kristensen said, even though the former offered the technical capability and the latter offered cost advantages.
Numerous boxships that are 8,000teu or larger will be delivered this year and next, which weighs heavily on market sentiment.
According to Lloyd’s List Intelligence, 106 post-panamax ships of 1.2 million teu will hit the water this year and 97 vessels totalling 1.1 million teu next year.
At the end of last year, the world box fleet on the water comprised 453 ships of this size, at 4.6 million teu.
Although the large new tonnage will be deployed on deepsea trades, particularly on the Asia-Europe route, Kristensen believes that capacity adjustments could offset the impact on rates.
He expects major liners to cascade panamax vessels to the buoyant intra-Asia trades – and that gives cause for new concern that rates on these trades will hit rock bottom.
“There will be no rate war in big trades in the foreseeable future, but I do see them in emerging-Asia trades,” predicted Kristensen.
The intra-Asia trades were among the few bright spots in the liner industry last year, delivering annual volume growth of 8.1%, according to Clarksons.
Maersk’s intra-Asia business, operated by its subsidiary MCC Transport, achieved a 6% gain in rates and a 19% jump in volumes last year.
Industry sources fear that because the main ports in Southeast Asia can handle panamax ships, regional players will slash their rates to fill their ships.
“If a liner got 10 panamax vessels [cascaded out from main routes] and cannot redeliver them, it can give them to its intra-Asian guys,” Kristensen said. “The costs are sunk, so they can just make the best use of them.
“Their main task would be to fill them.”
That, undoubtedly, will squeeze margins in intra-Asia trade despite the region’s expanding economies driving strong volume growth.
“It will still be a growth area for volumes, but not for rates,” Kristensen said.
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