Maersk CEO: No Reason to Order New Megaships

There is no incentive to order new ultra large containerships from a cost perspective right now, despite extremely low prices of newbuilding tonnage, according to Søren Skou, Chief Executive Officer of A.P. Møller – Mærsk A/S.

The comment was made in an earnings call anent the CMA CGM 22,000-TEU megaship order rumors and its potential impact on capacity discipline among container carrier players.

As highlighted by Skou, five years ago large ships were ordered due to fuel economy, however, this advantage has been minimized, if not disappeared entirely, given the current oil price levels.

Furthermore, given the fact that charter markets remain in the doldrums, it is a better option to hire ships on the open charter market that opt for buying new ones.

“Additions to the order book will be driven mainly by the need to grow capacity in order to meet the market demand, and nothing else,” Skou said.

“We have no ambitions or plans about ordering new large ships this or next year,” he added.

The containership order book stands at 13% of the fleet size. Should the owners abstain from ordering, the order book would stand at 7 percent by the end of next year and 1 % in two years, laying grounds for a positive market outlook.

There have been no mega ship orders since the third quarter of 2015.

In April this year, Maersk Line took delivery of its 20,568 TEU Madrid Maersk.

The ULCV belongs to the 2nd generation of the company’s Triple-E class of vessels and is the first of 11 ships ordered from Daewoo Shipbuilding and Marine Engineering (DSME) back in 2015.

Danish container shipping major returned to profit in the second quarter of 2017, with revenue growing by USD 1bn year-on-year.

The company reported a profit of USD 339 million for the second quarter of 2017, against a loss of USD 151 million in the second quarter of 2016.

The underlying result was a profit of USD 327 million, also a major return from a loss of USD 139 million booked in the corresponding period a year ago.

As concluded by Skou, Maersk Line plans to focus on profitability rather than volume growth for the remainder of the year. He added that the company used “the price war” over the recent period to gain a good market share, and now that the company is profitable again, efforts would be directed toward meeting the profit guidance.