Maersk Line is set to stop plying through the Panama Canal to move goods from Asia to the United States (US) east coast.
The move by the world’s biggest container shipping company is as bigger ships help it move profitably through Suez Canal.
The Chief Executive Officer of Maersk Line, Soeren Skou, said in Sigapore yesterday that Maersk Line will send vessels through Suez Canal that can carry as many as 9,000 20-foot equivalent units (TEUs) at a time, instead of using two 4,500-box-vessels through Panama Canal.
The company said in a statement that the last sailing through Panama will be on April 7 and the first service through Suez will be a week later.
“The economics are much, much better via the Suez Canal simply because you have half the number of ships,” Skou said.“One of the reasons for why this is happening now is that the cost for passing through the Panama Canal has gone up. At the end of the day, it comes down to cost.”
Shipping lines, including Maersk Line and Neptune Orient Lines Limited (NOL), have cut costs, reduced speed of their fleet and sold some vessels to contend with freight rates that are below break-even levels.
The Copenhagen, Denmark-based Maersk Line has said that pressure on charges will remain this year.
Fees for ships to go through the Panama Canal have tripled in the past five years to $450,000 per passage for a vessel carrying 4,500 containers, according to Skou.
He noted that the distance from China to the US east coast via the Suez Canal is about four per cent to five per cent more.
A $5.25 billion expansion of Panama Canal, the waterway handling five percent of global trade, will open by June 2015, six months later than originally planned.
The canal connects the Atlantic and Pacific oceans and is used by as many as 14,000 vessels a year.
Skou said that whether Maersk will use the Panama Canal after the expansion will depend on the economics.
Meanwhile, Maersk Line and MCC Transport are confirming plans of opening a branch office in Myanmar following the suspension of European Union (EU) and United States (US) trade sanctions in 2012 and strong economic outlook.
After 20 years of experience in Myanmar, operating under third party agency representation, Maersk Line and MCC Transport will increase their presence by stationing a permanent owners’ representative in Myanmar.
“I find it very exciting that we have received approval for a permanent representation in Myanmar which will allow us to be a part of the rapid development we will undoubtedly see in Myanmar in the coming years,” Managing Director of Maersk Thailand, Henrik Jensen, said.
The aim is to open a branch office in the second half of 2013 to assist Maersk Line’s global customers in entering the market and successfully sourcing goods to and from Myanmar, a market reaching 400,000 20-foot equivalent units (TEUs) in 2012.
Myanmar is the last untapped market in South East Asia.
It has significant natural resources, a large population, and is strategically located between two of the world’s largest economies, India and China.
Following five decades of military rule that came to an end in 2011, Myanmar has rapidly undertaken significant reforms to stimulate foreign direct investments and international trade.
The suspension of EU and US trade sanctions in 2012 has further boosted international focus on Myanmar.
With a population of 60 million, Myanmar has the potential of becoming one of the largest consumer markets in South East Asia, while the low cost of labour is attracting low end manufacturing and production companies.
Maersk Line has a high frequency with four sailings per week departing from Yangon and competitive slot costs on the feeder service.
Heading up Myanmar as Maersk Line’s owner representative will be My Therese Blank, who joined Maersk Line 2006 (in Sweden) and was stationed in Myanmar as owners’ representative during Q4 2012.
She is expected to start up her role in Myanmar this month.
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