Shipping volumes to increase 8%

Container shipping volumes will grow by seven to eight per cent globally this year, despite soaring fuel costs and a slowing world economy, according to a forecast by Maersk Line.

The world's largest container shipping firm said it expected trade within Asia to outperforming the global growth rate, according to Jesper Praestensgaard, Maersk's Asia Pacific Chief Executive Officer.

Praestensgaard said intra-Asia trade was growing relatively more than between the regions, so Asia was probably more shielded from a downturn in the US and Europe. He added that the firm would introduce a new China-Singapore service from next week to tap growing demand.

Maersk Line, part of Danish shipping and oil group A P MollerMaersk, now operates more than 500 container vessels and 1.9 million containers. Since last month, it has ordered 34 ships for delivery by 2012, amid concerns of an impending oversupply in shipping capacity worldwide.

"Shipping is cyclical, everyone knows that. So when we make investments in shipping, we invest in vessels with lifespans of 25 to 30 years, and you have to measure success over that lifespan," said Praestensgaard.

Soaring bunker fuel prices, now at more than $750 (Dh2,750) per tonne, up from about $500 in January, represents nearly 50 per cent of the firm's operating costs, and has had a significant impact on margins, he said.

Maersk's biggest container ships, at full capacity, can consume an estimated 46,200 litres of fuel for every 100km.

Maersk Line partially offsets its fuel costs by imposing a bunker-adjustment charge on customers, fuel hedging, and the practice of "slow steaming", where shippers operate vessels at slower speeds to cut fuel consumption and make up for it by increasing the number of ships on a route.

"There is no doubt that the current oil price is hindering global trade, both in terms of reducing consumption and increasing transportation costs in general," Praestensgaard said.

On mergers and consolidation, he said the potential merger between Singapore-controlled Neptune Orient Lines and HapagLloyd, the container unit of Germany's TUI AG, could be good for the industry that was now overly fragmented.

He declined to comment on Maersk's own interest in the German shipper, but Maersk Line global CEO Eivind Kolding told a German newspaper last month that he was not ruling out takeovers and was keeping a close eye on HapagLloyd.

Maersk Line had shocked Singapore authorities in 2000 when it decided to take a 30 per cent stake in Port of Tanjung Pelepas (PTP) and shift most of its operations there, threatening PSA Singapore Terminal's dominance in the region.

"The market demand was to be in Singapore as well, so that's why we're here too," Praestensgaard said, but added that more of Maersk Line's operations were based in PTP compared to PSA at this point, though he declined to give details.