Maersk Bids to Lift Freight Rates Above Breakeven Levels
Danish shipper Maersk Line, part of oil and shipping group A.P. Moller-Maersk, plans to make another attempt in November to lift freight rates and make them stick above loss-making levels.
The world's biggest container shipping company, hit by overcapacity in the industry and the global economic slowdown, has been fighting a losing battle this year to reach the widely-recognised breakeven level of around $1,000-$1,100 per twenty-foot container (TEU) on the key Asia to Europe route.
Maersk said in a letter to customers seen by Reuters it would hike the rate by $950 per TEU from Nov. 1. It had previously said it would raise the rate by $600.
The Shanghai Containerised Freight Index, which reflects rate levels, jumped by $895 in late June to $1409 after shipping companies hiked rates only to see them fall back in subsequent weeks.
Maersk introduced another rise in August since when prices have fallen for eight weeks in a row to $765. Prices are down 49 percent since the start of August.
The average rate in 2012 was $1,378.
"Maersk Line continues to face unsustainable market rates," Maersk Line said in its letter.
"The rapid decline of rates in the past few weeks has made it apparent that the previously announced increase of $600 pr. TEU will be insufficient to run the service at financially viable levels," it said.
The general rate increase will apply to all cargo moving from all Far East Asian origins to all North European and Mediterranean destinations, with the exception of Japan.
"The rate plunge is largely due to the carriers' failure to keep capacity in check," shipping newsletter Alphaliner wrote on Tuesday.
The withdrawal of two services earlier this year has been neutralised by the introduction of new ships with capacity of between 13,000 and 18,000 TEU in the last few months.
Maersk Line has also introduced three mega ships since July.
They are part of a series of 20 vessels ordered at Daewoo Shipbuilding & Marine Engineering's shipyard in Okpo, South Korea.
Reporting by Ole Mikkelsen; Editing by David Cowell (C) Reuters 2013.