Maersk has made a strategic volte-face by pursuing an aggressive ship-buying programme as it attempts to prevent CMA CGM from taking its spot as the world’s second-largest container line. The Danish company in September ordered 26 ships, each capable of carrying the equivalent of 18,600 twenty-foot containers, taking its total number of vessels on order to 131. The decision is a major pivot for Maersk, which has spent much of the past decade expanding its ship-to-doorstep logistics operation and is now under pressure to match rivals using windfalls from higher freight rates to grow their fleets.
Chief executive Vincent Clerc said in September that the Danish blue-chip was “going to need more ships” in order to deal with ongoing trade disruption, and that Maersk would now “play more assertively” in the market. Maersk’s new vessels — which will be delivered between 2029 and 2030 — will expand its total fleet to 882, an increase of 16 per cent on its existing tonnage. However, the new orders will do little to narrow the gap with larger rival MSC, which overtook it in 2022 as the world’s biggest shipping line and now boasts a fleet of 1,015.
CMA CGM is also nipping at its heels. The family-owned French company — which came close to bankruptcy after the 2008 financial crisis — has expanded aggressively in recent years and has 160 ships on order. It now surpasses Maersk in size when its current fleet and new orders are combined.
Speaking at the first UK port visit of its newest 400-metre-long container ship last month, Nicole Chamard, CMA CGM’s vice-president for its Asian and North Europe lines, said it was now “a fact” that the company would become the second-largest container line next year. Container shipping groups have used profits generated during a period of unprecedented trade disruption stretching from the Covid-19 pandemic to the closure of the Strait of Hormuz to buy more vessels. Disruption has driven up the rates shipping groups can charge, and the distances they must travel, and lines have now amassed record order books on bets that geopolitical turmoil, tariffs and extreme weather will underpin a continued shipping boom.
Maersk has already upgraded its profit forecast twice this year, having originally braced for a loss. The shipping group has grown its fleet by about a fifth since the pandemic, but in the past 10 years has taken a different route to rivals by building up its factory-to-consumer logistics operation. That strategy was an attempt to help it weather volatility in the container shipping sector, but the company has changed tack on a bet that freight prices will stay higher for longer.
Source: Financial Times Companies · Summarized by HeadlinesBriefing