Maersk looks to increase client prices in 2018

The world’s largest ocean carrier is looking to negotiate higher prices in client contracts for 2018, but “much depends on how the supply glut pans out,” Steve Felder, Mumbai-based managing director of Maersk’s South Asian unit told Bloomberg.    The third quarter of 2017 saw demand fall behind oversupply in the maritime industry, a Maersk Line official told Bloomberg in an interview last week.
   “We have started to see some pockets of downward pressure,” Steve Felder, Mumbai-based managing director of Maersk’s South Asian unit said to Bloomberg. “The global trade order book at around 13.5 percent of capacity isn’t high, however, given that freight rates are largely determined on the basis of supply-demand balance, they remain fragile,” he said.
   According to International Monetary Fund forecasts, world trade volumes are expected to slow from 4.2 percent to 4 percent in 2018, though Bloomberg noted that’s still higher than the seven-year low of 2.4 percent hit in 2016. Furthermore, Drewry Shipping Consultants expects the container-shipping freight growth rate to drop to less than 10 percent in 2018 from around 15 percent in 2017, said Bloomberg.
   Bloomberg analyst Rahul Kapoor weighed in that global trade volumes are recovering from a 2015-2016 slump with demand for goods and services rising 5 percent to 6 percent on Transpacific and Asia-to-Europe trade this year, but Maersk is looking to negotiate higher prices in client contracts for 2018. “Much depends on how the supply glut pans out,” Felder told Bloomberg.
   Regionally, India shows promise as its containerized trade – representing about 50 percent of overall trade – grew at 10 percent in the quarter ending in September, said Bloomberg. In total, the import-export market in India has grown 7.7 percent in the first three quarters, according to Maersk.
   “Given containerized trade growth in the first half was somewhat subdued, it is possible that full-year growth will fall short of double digits,” Felder said. “Much will however depend on fourth-quarter growth levels, which so far look positive.”