'Significant Growth' in Asia-Europe Trade: Maersk CEO

2013-04-21

Trade between Europe and Asia is growing significantly, and the routes are getting the biggest investment attention from major shippers, Maersk Group CEO Nils S. Andersen told "Squawk on the Street".

"Trade, of course, is very big from Asia to Europe, also Asia to the U.S.," he said. "What we're talking about is maybe a little slower growth, but of course this business is a growth business in general."

Andersen sees a trend in global trade favoring "significant growth" in trade from Europe to Asia, "reflecting the fact that the European economy is becoming more competitive as costs go down," he added.

"You see the Chinese government steering away from being an export and investment-led economy to being an import, domestic-consumption and local wealth-driven economy," he said.

Ships returning to Asia from Europe are underutilized with "significantly less back-haul trade," Andersen said. "That means there is a lot of opportunity to offer good rates to our export customers in Europe."

Twenty triple-E-class container ships—the largest available, and too big for the Panama Canal—are being built, 10 of them for Maersk. Each ship costs about $190 million and can carry about 18,000 containers. Andersen said that they are designed exclusively for Asia-Europe routes and "will be the most fuel-efficient ships on that trade by quite a margin."

These ships represent "quite a big infusion of capacity" and will be implemented gradually over a longer period and replace smaller, less-efficient ships, he said. Right now is "not the optimal time to put in capacity, so that's why we're [doing it] gradually," he added.

Andersen doesn't expect these vessels to change shipping costs but rather to reduce fuel consumption, which will translate to more profits. Maersk diversifies its portfolio to hedge against fuel costs, and although the company doesn't hold a price forecast for oil, Andersen said it is prepared for both higher prices as well as a temporary downturn in the market.

Source from : CNBC

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