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Reefer rates must rise, warns Maersk chief

[ September 27, 2012   //   ]

Shipping lines urgently need to raise prices to their reefer customers, the head of the world’s biggest carrier of such traffic, Maersk Line, told the Cool Logistics conference in Antwerp on 25 October. Chief executive officer Soren Skou said: “When I came into this job in January 2009, we had increased customer satisfaction and market share (Maersk now has about a quarter of the the world reefer box market) but we were losing $9m a day, which clearly wasn’t sustainable.” Average of earnings of around 1-3% a year were “destroying shareholder value – as evidenced by parent company AP Moller’s share price which was the same today as 2004, despite the massive investments that the company had made in new ships and terminals. Returns on the reefer business were a little stronger but still “well south of 5%”.

The industry as a whole had invested $22 billion more than it had generated and had, in effect, been unable to fund itself since 2008. Until now, the container and ship leasing companies had been willing to make up the shortfall but with the banking crisis, this was no longer possible.

The other big squeeze on shipping was the remorseless rise in bunker costs.

The net result, said Skou, was that “during the past seven years reefer prices haven’t covered inflation or the increase in bunker prices.”

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