Leading shipper aims to maintain market share as trade flows grow

NINGBO, Zhejiang - Maersk Line Ltd, the world's largest shipping company by capacity, will deploy more vessels on Asia-West Africa routes to serve growing trade flows, said Keith Svendsen, head of the company's East China cluster.

The move is also intended to maintain Maersk's leading market share on these routes, Svendsen added.

Currently, Maersk Line Ltd operates three routes between Asia and West Africa. Two serve major Chinese ports such as Shanghai, Ningbo and Hong Kong. [Photo/Agencies]

"Asian-West African trade has been one of the fastest- growing markets in the past few years, and it is expected to maintain 15 percent to 20 percent year-on-year growth over the next three years," he said.

Sino-African trade plays a significant role. "One in three containers in the world serves China. We have seen significant trade flows from China to other emerging markets and Africa is an important part of the story," Svendsen said.

The vessels, known as West Africa Max ships, with a capacity of 4,500 containers, are said by the company to be the largest container ships that ply the route.

The company ordered 22 such vessels from South Korea's Hyundai Heavy Industries. Six went into service on May 21 and another three are scheduled for delivery by the end of the year, according to the company. The rest are still under construction.

All will be dedicated to Asian-West African trade, connecting Chinese and African ports, Svendsen said.

Currently, Maersk operates three routes between Asia and West Africa. Two serve major Chinese ports such as Shanghai, Ningbo and Hong Kong. The ships sail for Africa bearing building materials, machinery and daily necessities. They return with commodities such as cotton or wood.

Zhang Monan, an economist at the Economic Forecast Department of the State Information Center, said China-Africa trade is likely to continue growing.

China will remain a major global manufacturer in the near term, and its need for resources and commodities will drive up its trade with African countries, Zhang explained.

In the meantime, China's low-priced products can meet demand in African markets, she said.

However, the appreciation of China's currency, rising labor costs and global commodity price hikes have put tremendous pressure on Chinese manufacturers. More Chinese companies are considering investing in overseas markets to make use of labor and other factors in local markets.

These factors also explain rising Chinese investment in Africa. Through investments in African countries, Chinese businesses can process natural resources locally for export to China, said Zhang.

"This will help Chinese businesses expand their industrial chain on a global scale and facilitate the whole country's industrial upgrading," she said.

For the shipping industry, the growing fleet serving routes between Asia and West Africa will benefit ports in both regions. It will provide Chinese ports with a larger and steadier cargo flow, said Zhang Hongbo, an analyst with CITIC Securities Co Ltd.

According to a forecast released by the Chinese Academy of Sciences this month, Chinese ports will remain the busiest in the world this year.

However, this is not necessarily good news for smaller shipping companies. Larger ships mean lower costs per container. This may exert pressure on smaller companies and lead to fiercer competition, especially as "the whole industry is struggling with high oil prices", the report said.

But it is still too early to see any "real impact" on smaller companies in the industry, Zhang said.