Maersk Line, Philips seal pact on emission control

MAERSK Line and Dutch technology company Philips have signed a five-year to cut carbon dioxide (CO2) emissions for every Philips container moved by Maersk’s boxships by 20 per cent.

The agreement integrates both companies’ ongoing commitments to reduce CO2 emissions within their value chain by 2020. The CO2 reductions are to be achieved over a five-year time frame between 2016 and 2020, and will focus closely on reducing emissions through fuel efficiency, Maersk Line said in a release.

The companies have also made a commitment to create transparency on the environmental impact of ocean transportation and to work towards integrating CO2 and other sustainability indicators into the commercial supplier relationship.

Head of Forwarding and Distribution at Philips, Frank Dingen said “Over the past years we’ve seen Maersk Line outperform the industry average when it comes to CO2 emissions. For 2015 results are looking promising as well. We want to lock in similar achievements for the years to come. Via the Carbon Pact we expect Maersk Line to deliver tangible carbon savings and we look forward to working together on further increasing transport efficiency and transparency of environmental impactaid”.

Meanwhile, Maersk Line, the world’s biggest container-ship operator is altering course, slashing jobs and canceling or delaying orders for new vessels after years weathering a sharp downturn in the container-shipping market.
Danish conglomerate, A.P. Møller-Maersk A/S said its Maersk Line container-shipping unit would cut 4,000 jobs from its land-based staff of 23,000.

The company is also canceling options to buy six Triple-E vessels, the world’s largest container ships, to cope with the deepest market slump in the industry since the 2009 global financial crisis. Maersk said it would also push back plans to purchase eight slightly smaller vessels.

The decision to halt its fleet expansion, according to www.wsj.com, represents a significant U-turn for the company, which had been investing heavily amid the downturn. Counting on its market-share dominance and deep pockets, it aimed to expand as smaller competitors retrenched. But after issuing a surprise profit warning last month, Maersk signaled it, too, was no longer immune to a combination of slowing global growth and massive container ship overcapacity on many routes.

The conglomerate said it would cut its annual administration costs by $250 million over the next two years and would cancel 35 scheduled voyages in the fourth quarter. That is on top of four regularly scheduled sailings it canceled earlier in the year.
Maersk has already ordered 27 vessels this year, including 11 Triple-E behemoths, which can carry in excess of 19,000 containers.
“Given weaker-than-expected demand, this will be enough for us to grow in line with our ambitions over the next three years or so,” said Maersk Line Chief Executive Søren Skou.

The Triple-E orders were placed at South Korean yard Daewoo Shipbuilding & Marine Engineering Company and included a nonbinding option to order six more ships. Maersk officials said that under the terms of the deal, the Danish company isn’t subject to any damages for canceling the option.

Maersk Line is the world’s biggest container operator in terms of capacity. The end of 2017 will complete the job reductions announced.

The cost cutting comes after the full-year profit warning in October, the latest in a series of dire forecasts from the global container-shipping industry. Maersk Line’s full-year underlying earnings are expected to come in at $1.6 billion, compared with an earlier forecast of more than $2.2 billion.

The last time Maersk Line cut its staff was in 2008, at the height of the global economic crisis, when it shed about 5,000 people.
Over the past three years, the world’s top 20 container operators have moved to either consolidate or form alliances, in an effort to cut costs amid the downturn.

But Maersk and its biggest competitors have also spent billions of dollars to buy giant ships, like the Triple-E vessels. Cheaper to steam and more efficient when full, these new ships have swollen the world’s fleet.
Analysts estimate the industry suffers from as much as 30 per cent overcapacity on some of the busiest ocean trade routes. Container ships move more than 95 per cent of the world’s manufactured goods.