The global container shipping market faces overcapacity in the coming years, and rates paid by customers have fallen to an “unsustainable level,” A.P. Moller-Maersk CEO& Vincent Clerc said Thursday at the group’s annual shareholders meeting, according to Reuters.
An influx of new container ships last year added 9% to the industry’s global capacity, which is expected to rise by another 11% this year and 7% next year, Maersk said.
“Demand growth, slow-steaming, ship recycling will have to offset over time this overcapacity so that we can get back to a healthy earnings level,” Clerc said, according to the report.
Maersk, which said last year it would cut 10K jobs, told the AGM it will continue to focus on keeping costs down, but maintain its policy of paying a dividend to shareholders of 30%- 50% of underlying net earnings.
Container rates have faded after surging in December and early January as attacks on shipping in the Red Sea forced companies to redirect ships away from the Suez Canal to a much longer journey around Africa.
Shipping rival Hapag-Lloyd said separately that the global oversupply of container ships and the crisis in the Red Sea will force it to cut costs in 2024.