Western Railroad Discussion > Maersk plans to move away from shipping

Maersk has been a major supplier of intermodal cargo to US railroads via its world wide shipping network, so an announcement that it intends to "move away from shipping" can't be a good thing for US railroads.

Reuters reports:

>> "We will move away from the shipping side of things and go towards the higher profit generators and more stable businesses," Maersk Chief Executive Nils Andersen told the newspaper.

"What we are going to do over the next five years, we are not going to invest significant amounts in Maersk Line. We have sufficient capacity to grow in line with the market." <<

The investment will go into oil and drilling operations, according to the article

http://www.nytimes.com/reuters/2012/11/18/business/18reuters-maersk-shipping.html?hp

Not really. Other shipping companies will gladly except there customers.

Makes sense, since MSK is the world's largest containership carrier and the downturn has generated losses as much as $750mil per quarter. But as someone else pointed out, other carriers will be there to gladly make up the difference in whatever MSK decides to remove out of the market.

Ted S-P

Funny - they just ordered eight new giant container ships. Each one will carry over 18,000 containers. The world's largest container ship "Marco Polo" is now on its maiden voyage from Asia to Europe. It holds 16,000 container. Until this trip, the four largest were the "Emily Maersk" and her sister which held 14,000+ containers.

Frontrunner Wrote:
-------------------------------------------------------
> Not really. Other shipping companies will gladly except there customers.

Except for the fact that Maersk, although Danish owned, operates many US flagged vessels. That also means American crews and American shipyards.

Lackawanna484 Wrote:
-------------------------------------------------------
> ....Reuters reports:
> "What we are going to do over the next five years,
> we are not going to invest significant amounts in
> Maersk Line. We have sufficient capacity to grow
> in line with the market."
>
> The investment will go into oil and drilling
> operations, according to the article.

My take is that Maersk Line is not letting the business go, they're just not investing much in it. They have enough capacity to handle the business over the next few years.

mapboy

mapboy Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > ....Reuters reports:
> > "What we are going to do over the next five
> years,
> > we are not going to invest significant amounts
> in
> > Maersk Line. We have sufficient capacity to
> grow
> > in line with the market."
> >
> > The investment will go into oil and drilling
> > operations, according to the article.
>
> My take is that Maersk Line is not letting the
> business go, they're just not investing much in
> it. They have enough capacity to handle the
> business over the next few years.
>
> mapboy


Right. The investment chain requires them to made decisions years in advance, and they now have (far?) more capacity than they can use. Until demand and pricing catches up with that capacity, they're not adding or investing in it.

This could also be a signal that they're content with their share of the market, and don't intend to seek more business (by cutting rates) or engage in cage fights with their competitors over a stagnant to declining market.