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  • edgetrader2001 edgetrader2001 Aug 15, 2012 11:02 AM Flag

    Maersk Conf Call

    "Well, coming back to the explanation I gave before, we had a slower increase in our average rates than you would see in the market, and in particular, that you will see in the spot indexes, whichever one of them you look at. So we feel that there is – even if the spot rates should peak now, there's still some room for us to improve our average rates.

    Having said that, we also feel that the spot rates should stay on a reasonably high level and that they should improve from where they are now, because the industry needs a better return than it's been seeing in the last quarters. So we feel there's limited room for downward adjustments. It can come short term. But we will definitely continue our efforts to increase rates until the industry has a satisfactory return."

    "Even if the volumes should be unexciting in the second half, which we expect they will be, the solution to this for us is not lowering rates."

    "But again, I think we will warn against just looking at capacity utilization as the trigger of rate increases or decreases. It's a mistake we have done along with, I can say respectfully, others in the industry. But it's not the way forward. It's normal for an industry to have excess capacity when growth is slow. And we just have to live with that and avoid dumping our rates. You're not going to get more volumes in total onto the vessels by dumping the rates, because our competitors will dump their rates as well."

    "– it's difficult to say where spot rates are moving. We have upped
    the spot rates Asia, Europe and are at the moment the only one who has been doing that. We've done that towards the end of June and this impacts volume at the moment slightly. We do believe that the competition will follow, which will stabilize and potentially even increase the spot rates over the coming months. But even apart from that, there should be room for us to work on our contracts to increase our average rate over the coming quarters."

    "We need stability of rates if we want to keep a reasonable level of

    And I think having learned from 2009 that cutting rates doesn't create more business, maybe quite to the contrary. It's not the solution. We need to maintain acceptable rates and the customer also need to understand that if they want investments in the industry and good service, they have to look at the total cost of transportation and production in their
    results, not just on $50 more or less per container."

    "Well, I think the real issue here is industry conduct and I can't talk for the industry, but I can talk for us, that we feel that are maintaining our market share at the moment on a reasonable level and we have seen rates go up as a consequence of us behaving maybe less aggressive than we have in the past, and that's what we intend to do.

    What the industry does is outside our, of course, influence. We can't influence that. But I think in general, the industry understands that you don't grow the market by cutting rates and when you cut rates, competitors follow. So it's really down to that and we've been through a number of iterations and we get wiser every time."

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