14-12-2017

Maersk wants clients to pay more in 2018

THE world's largest ocean carrier is looking to negotiate higher prices in client contracts for 2018, but "much depends on how the supply glut pans out".

The third quarter of 2017 saw demand fall behind oversupply in the maritime industry, a Maersk Line official said in an interview with Bloomberg as reported by American Shipper.

"We have started to see some pockets of downward pressure," Steve Felder, Mumbai-based managing director of Maersk's South Asian unit said. "The global trade order book at around 13.5 per cent of capacity isn't high, however, given that freight rates are largely determined on the basis of supply-demand balance, they remain fragile," he said.

According to International Monetary Fund forecasts, world trade volumes are expected to slow from 4.2 per cent to 4 per cent in 2018, though Bloomberg noted that's still higher than the seven-year low of 2.4 per cent hit in 2016. Furthermore, Drewry Shipping Consultants expects the container-shipping freight growth rate to drop to less than 10 per cent in 2018 from around 15 per cent in 2017, said Bloomberg.

Bloomberg analyst Rahul Kapoor weighed in that global trade volumes are recovering from a 2015-2016 slump with demand for goods and services rising 5 per cent to 6 per cent on Transpacific and Asia-to-Europe trade this year, but Maersk is looking to negotiate higher prices in client contracts for 2018. "Much depends on how the supply glut pans out," Mr Felder told Bloomberg.

Source: Schednet

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