Sparking Consolidation Through Buying Bigger Box Ships

Maersk Line , the world’s top container shipping firm, expects the largest shipping companies to acquire larger and larger vessels to drive costs down, forcing smaller rivals out of the market, the head of its Asia Pacific region said.

Maersk in February surprised the global shipping industry with an order worth up to $4 billion for 10 of the world’s biggest container ships plus an option to order an additional 10 vessels.

Due to start being delivered from 2013, Maersk’s 18,000 twenty-foot-equivalent containers would surpass the current largest box ship of 15,000 TEUs.

“We believe that … the largest shipping companies will continue to expand the scale of economies of the industry,” said Thomas Knudsen, Maersk Line’s chief executive for Asia Pacific Region, at an industry conference in Singapore.

“As we drive these scales of economy, it will be difficult for the smaller carriers in these industries to compete. That will drive consolidation.”

The global shipping industry has rebounded strongly from the worst downturn in history in 2009 as the recession hit global trade and forced many companies to lay up ships and cut jobs.

The industry, seen as a key indicator of global economic activity, however, would face a shortage of ships in the coming years due to surging demand, especially in Asia.

Some industry experts also said that with most operators running the ships at a slower speed to conserve fuel, more vessels were needed to serve the same volume of cargo.

Maersk had said that the 18,000 TEU container vessels will be used to serve the benchmark Asia-European route and likely call at five Chinese ports.

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