END OF MEGA SHIP BUILDING ! MAERSK STOPS ORDERING MEGA SHIPS - FOCUS ON TAKEOVERS

Maersk ships under construction at Daewoo

Shipping is often viewed as an antiquated method of transport, the reality couldn’t be more different, with shipping as prevalent today than it has ever been as the primary facilitator of world trade. Here are 5 surprising facts about the industry:

1. When ships are out at sea, only one in ten crews have available internet, often leaving crews lampooned from friends and family, as well as entertainment, for weeks on end. However, the revolutionary quantum internet which uses ships as transmitters of the World Wide Web could change all this.

2. The largest ships cost over US$200 million to construct. Watch a video on how CMA CGM mega-ship being constructed.VIDEO ON CMA CGM MEGA SHIP BUILDING

3. At present, there are currently around 55,000 active merchant ships.

4. At present, there are around 1.5 million sailors employed globally, with the Philippines producing the highest number of seafarers.


5. Despite being relative to the sixth-highest polluting country, shipping is still the greenest method of transport.

BUT ARE MEGA SHIPS THE ANSWER?

View post on DIS-ECONOMIES OF SCALE IN CONTAINER SHIPPING

The owner of the world’s largest container shipping line will stop ordering newly built vessels and instead pursue takeovers in an industry that has been plagued by overcapacity for almost a decade.

A.P. Moeller-Maersk A/S, whose Maersk Line unit has repeatedly broken the world records it has regularly set in mega container ships developed with Asian ship yards, “is done with ordering new steel,” Michael Pram Rasmussen told Bloomberg at the the company’s Copenhagen headquarters.

Big ships!

“If Maersk Line needs to grow, it doesn’t make sense to order new ships as there are already too many ships in the market,” Rasmussen said. “So if we want to grow, we need to do it through acquisitions so that we don’t flood the market with more ships.”

Maersk Line still has 27 ships in its order book, corresponding to about 12 percent of its current fleet. The container industry’s combined order book represents about 17 percent of the global fleet.

Meanwhile, the shipping industry is suffering from falling freight rates caused by a combination of overcapacity and a slowdown in global trade growth. Hanjin Shipping Co., South Korea’s biggest container company with 97 ships, recently filed for bankruptcy protection in Seoul.

As recently as 2015, Maersk Line placed orders with ship yards Daewoo Shipbuilding & Marine Engineering Co., with Hyundai Heavy Industries Co. and with Cosco Shipyard Co. The ships are due for delivery in 2017 and 2018.

Ships for Maersk are under construction in South Korea,

The 11 vessels from Daewoo will carry a record 19,630 standard-sized containers and cost $1.8 billion each. They are the second-generation version of the so-called Triple-E class vessels that Maersk developed with Daewoo. The Danish company in 2011 ordered 20 Triple-Es, which carry about 18,000 containers each.

“It has previously made a lot of sense when we went out and ordered specific vessels,” Rasmussen said. But “there’s already a large order book in the market and at the same time, world trade isn’t growing a great deal.”

Maersk on Thursday revealed a new strategy that includes splitting the conglomerate into a transport and an energy company. Rasmussen said Maersk Line is “well-equipped and ready,” for acquisitions.

While he declined to comment on specific targets, he says options include shipping lines that operate mostly on trade routes overlapping with Maersk’s, which will “give us a lot of synergies.” It’s also looking at rivals who are strong “in an area where we aren’t present,” so they “fill a hole” in Maersk Line’s network, he said

WILL 2016 BE AN YEAR OF TAKEOVERS

With local sources suggesting that a 37.13% stake in K Line is backed by Maersk Line, speculation has been mounting with regards to Maersk Line taking over the Japanese shipping line, according to TradeWinds.

An unnamed K Line executive said: “This rumour is groundless. There was a Japanese article on this last month but the magazine did not verify the information with K Line. There is no reason why Maersk wants to take over our company.”

An unnamed Maersk spokesperson said: “Our aim is to grow organically. As always, if there is an interesting opportunity, we will look at it. We welcome consolidation. Our industry is very fragmented and consolidation can help transform our business to the benefit of the customers.”

It was previously reported that channels had been opened for Hyundai Merchant Marine (HMM) to join Maersk and MSC’s 2M alliance.

This idea was proposed in a bid to help HMM overcome financial difficulties and to help the carrier survive in a market riddled by low freight rates, overcapacity and weak demand.

Maersk had also recently stated that it was looking into several options ahead of the review, and is considering a two-way split that will transform the business into a transport and energy company.

This news came on the back of news that it is still unclear as to whether its terminal operating unit APM Terminals and logistics unit Damco will be sold off.


As it stands, Maersk Line owns a 15.2% share of the global shipping fleet with a total operating capacity of more than 3.15 million TEU, with K Line holding a 1.7% share (more than 359,000 TEU of fleet capacity).