Maersk Line to cut transpacific capacity, seeks rate hikes

Maersk Line to cut transpacific capacity, seeks rate hikes

   Maersk Line said it will reduce its transpacific capacity by dropping two weekly strings and will implement freight rate increases of at least $300 per FEU in the Asia/U.S. West Coast North America market and a minimum rise of $500 per FEU for the Asia/U.S. East Coast trade.

   The announcement comes at a time when a number of lines are reducing capacity in poorly performing trades in order to boost flagging rates. Earlier this month, Maersk said it has targeted a minimum increase of $300 per container for all westbound North Europe-to-North America cargo, by Jan. 1.

   Changes to the Danish mega-carriers transpacific network include the cancellation of the weekly TP10 and TP14 services, which Maersk said represents about 10 percent of its capacity in the trade.

   “Our new network will allow for growth from East and North China, which are rapidly growing markets,” said Robert Kledal, Maersk Line’s senior vice president.

   “We will continue to run our business efficiently in order to limit the impact of rising costs. There is no doubt that the high fuel and intermodal rail costs are having an impact on the industry. While there has been talk about overcapacity, in our experience, added capacity has been absorbed by the volume growth. This puts strain on the terminals, rail networks, and trucking capacity, which are challenged to keep pace,” Kledal said.

   “In 2007, the freight rates will have to increase to reflect the dramatic increase in the cost of providing the service. A part of our work is to gain efficiency and continuously improve our product to provide a competitive offering aligned with our customers needs. We will continue to develop our services in order to meet customer requirements, but we will need to ensure that this is being done with fair compensation,” he said.

   Maersk added that for cargo continuing to inland destinations, the increases “must be substantially higher in order to offset the dramatic intermodal cost increases of providing inland service.”