Demand growth in container-shipping industry unlikely to return to pre-crisis levels anytime soon amid slower globalization, will probably grow at roughly same pace or no more than 1.5 times rate of global economy, says Maersk executive

Cindy Allen

June 5, 2013 (Bloomberg LP) – Demand growth in the container- shipping industry probably won’t return to pre-crisis levels in the coming years as the pace of globalization slows, the head of Maersk Line’s North European operations said.

Demand will probably increase at the same pace as or no more than one-and-a-half times the rate of the global economy, compared with growth rates in the past of three times as much, Karsten Kildahl, the executive said at a maritime conference in Munich.

“It is important to recognize that we have been spoiled in the container industry for decades as we have seen growth helped by globalization,” he said. Future increases will be “much more in line” with global trade as there aren’t many more companies that can “containerize or outsource what they are doing.”

The container shipping industry, in its fifth year of crisis, is suffering from slow global trade, an overcapacity of vessels and low freight rates. As new large container ships enter the market, the imbalance will probably continue with the fleet growing 7.5 percent in 2013 compared to demand growth of 4.5 percent, Drewry Maritime Equity Research said on May 16.

Kildahl said he expects the capacity overhang to last for the next couple of years, and liners will have to scrap old vessels as they purchase new ones. Maersk Line is the world’s biggest container liner.

“We as carriers need to deal with it,” he said. “To sit back and hope the supply and demand will take care of itself is unrealistic.”

Uwe Lindemann, the head of Global Markets at Hapag-Lloyd AG, said at the conference that the “very high” demand growth rates are “a thing of the past. But the global container transport business will continue to grow, that seems pretty clear,” he said.

--With assistance from Niklas Magnusson in Stockholm. Editors: Angela Cullen, Tom Lavell

To contact the reporter on this story: Nicholas Brautlecht in Hamburg at nbrautlecht@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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