Huge new ship order is minimum for Maersk

The news that Maersk is investing in more, larger container ships may at first appear to be an example of unsustainable expansion in a depressed market. Yet looking closely at the figures, it does not seem overly ambitious.

The initial order will be for 11 ‘second generation Triple E’ vessels of a capacity of 19,630 TEU with an option of a further six vessels of the same class and size. They will all be built by Daewoo Shipbuilding & Marine Engineering in Korea for a price of US$1.8bn, presumably for the first 11 ships.

If all 17 vessels are purchased, the increase in fleet size will represent 10% of present capacity. Over the past year Maersk Line has been operating 2.9m TEU, with 59% – 1.7m TEU – owned tonnage. Maersk states that the fleet being operated now is 3m TEUs, with 1.7m TEUs being owned and 1.3 TEUs being chartered.

At present Maersk has ships representing 13% of total – both owned and chartered- fleet capacity on order, including seven feeder vessels and some medium sized vessels on long-term charter. The first batch of new E-Class ships are to be delivered between April 2017 and May 2018.

The company’s forecasts container traffic to grow at annualised rate of 3-5%, which is a slightly conservative estimate compared to the opinions of some other participants in the market. Over the period of the next 2-3 years this implies a growth in demand of 9-15%. However Maersk saw the numbers of containers moved increase by 10% over 2014, which represented a big gain in market share when the market as a whole only rose by 1%.

Of course Maersk could increase the proportion of owned tonnage in its fleet with little difficulty to accommodate its larger owned fleet, however the direction of the business suggests that there is no need for this.

The implication of these numbers suggests that the Danish shipping line wants to sustain its growth in market share and the continuing increase in new, efficient big vessels is the minimum required to do this.