The Financial Times of 19th November 2012 contained two articles 'Maersk to switch away from shipping' and 'Sea freight trade still trapped in doldrums' by Mark Odell and Richard Milne, which highlighted the current capitalist crisis of overproduction at the Maersk shipping line, and in the wider container shipping industry.
The Maersk Line contributed half of the revenue in 2008 to its parent company, the Danish business conglomerate AP Moller-Maersk Group (in 2011 they had a profit of 18 billion Danish Kroner). The Maersk Line is the largest container shipping operator in the world with 550 vessels, 2.2 million TEU's (twenty foot equivalent units), and accounts for a 16% market share of the worlds container shipping industry. But in 2011, Maersk Line had a net loss of $540 million and only a “modest profit” is expected in 2012. In the wider container shipping industry the “market spot rates hit a rock bottom of $450 per TEU in December 2011, a long way below shipping lines' operating costs” (Financial Times).
The Maersk Group plan to switch investment to other businesses in the group. They are keen to develop more in ports and drilling with an earnings target of $1 billion a year each by 2018, and development in oil production where they are aiming to increase from 265,000 to 400,000 barrels by 2020, and increase annual investment from $3 billion to $5 billion. In 2011 the Maersk oil division made a profit of $2.1 billion, and drilling and ports made profits of $500 million and $650 million respectively. Nils Andersen, Chief Executive of the Maersk Group announced “we will move away from the shipping side of things and go towards the higher profit generators and more stable businesses. We are not going to invest significant amounts in Maersk Line. We have sufficient capacity to grow in line with the market. The industry is definitely not earning enough money to be able to invest going forward. We need to see better rates and higher profits”. The aim of the Group is to have the Maersk Line account for 25-30% of revenue in contrast to the state of things in 2008.
During the economic good times prior to the crash of 2008, volumes of containerised goods rocketed and capacity struggled to keep up with demand, new tonnage was ordered during this boom time and are being introduced now such as the CMA CGM Line's huge vessel (16,000 TEU's) Marco Polo, but this will be overshadowed by the Maersk Line's own Triple E ships which will be 18,000 TEU's and introduced in 2013. The Financial Times writes that in the container shipping industry “an obsession with scale to drive down costs and the defence of market share, rather than a focus on the bottom line (profit), drive the desire for ever larger, more fuel-efficient vessels”. When the downturn hit in 2008 container rates fell off a cliff, leaving many in the industry struggling for survival as new vessels continued to arrive.
The container shipping sector is massively oversupplied, plagued by overcapacity, falling freight rates that regularly do not cover operating costs, consumer demand remains in the doldrums in a weak global economy. London Shipping Consultants Drewry believe “at the moment, there is too much capacity in the market because there are too many ships being delivered and demand is weak and getting weaker”. Shipbrokers Braemar Seascope conclude that “the market could be oversupplied by a third for the next three years”.
The container shipping industry is a good example of what Engels described in Anti-Duhring as “the periodic alteration of speculative production booms and commercial crises, and to the whole of the present anarchy of production”. This “anarchy of production” in the shipping sector has led to overproduction which causes crisis in capitalism. Marx writes in Capital Volume 3 that “overproduction of capital always involves overproduction of commodities” and “overproduction of means of production... produces disruption and stagnation in the capitalist production process, crisis, and the destruction of capital”. The overproduction in the container shipping industry has seen a lowering of the rates of profit in what Marx described as “the progressive tendency for the general rate of profit to fall is thus simply the expression, peculiar to the capitalist mode of production”.
When socialism takes over existing world production there will be a practical system of world production, distribution and consumption operating directly and solely for human needs. The world wide container shipping industry would be an integral part of world socialist distribution of goods. The capitalist “anarchy of production” in the shipping industry would be over, “overproduction” would not be a concept recognised in socialism when there is production for use and needs.
Steve Clayton
The Maersk Line contributed half of the revenue in 2008 to its parent company, the Danish business conglomerate AP Moller-Maersk Group (in 2011 they had a profit of 18 billion Danish Kroner). The Maersk Line is the largest container shipping operator in the world with 550 vessels, 2.2 million TEU's (twenty foot equivalent units), and accounts for a 16% market share of the worlds container shipping industry. But in 2011, Maersk Line had a net loss of $540 million and only a “modest profit” is expected in 2012. In the wider container shipping industry the “market spot rates hit a rock bottom of $450 per TEU in December 2011, a long way below shipping lines' operating costs” (Financial Times).
The Maersk Group plan to switch investment to other businesses in the group. They are keen to develop more in ports and drilling with an earnings target of $1 billion a year each by 2018, and development in oil production where they are aiming to increase from 265,000 to 400,000 barrels by 2020, and increase annual investment from $3 billion to $5 billion. In 2011 the Maersk oil division made a profit of $2.1 billion, and drilling and ports made profits of $500 million and $650 million respectively. Nils Andersen, Chief Executive of the Maersk Group announced “we will move away from the shipping side of things and go towards the higher profit generators and more stable businesses. We are not going to invest significant amounts in Maersk Line. We have sufficient capacity to grow in line with the market. The industry is definitely not earning enough money to be able to invest going forward. We need to see better rates and higher profits”. The aim of the Group is to have the Maersk Line account for 25-30% of revenue in contrast to the state of things in 2008.
During the economic good times prior to the crash of 2008, volumes of containerised goods rocketed and capacity struggled to keep up with demand, new tonnage was ordered during this boom time and are being introduced now such as the CMA CGM Line's huge vessel (16,000 TEU's) Marco Polo, but this will be overshadowed by the Maersk Line's own Triple E ships which will be 18,000 TEU's and introduced in 2013. The Financial Times writes that in the container shipping industry “an obsession with scale to drive down costs and the defence of market share, rather than a focus on the bottom line (profit), drive the desire for ever larger, more fuel-efficient vessels”. When the downturn hit in 2008 container rates fell off a cliff, leaving many in the industry struggling for survival as new vessels continued to arrive.
The container shipping sector is massively oversupplied, plagued by overcapacity, falling freight rates that regularly do not cover operating costs, consumer demand remains in the doldrums in a weak global economy. London Shipping Consultants Drewry believe “at the moment, there is too much capacity in the market because there are too many ships being delivered and demand is weak and getting weaker”. Shipbrokers Braemar Seascope conclude that “the market could be oversupplied by a third for the next three years”.
The container shipping industry is a good example of what Engels described in Anti-Duhring as “the periodic alteration of speculative production booms and commercial crises, and to the whole of the present anarchy of production”. This “anarchy of production” in the shipping sector has led to overproduction which causes crisis in capitalism. Marx writes in Capital Volume 3 that “overproduction of capital always involves overproduction of commodities” and “overproduction of means of production... produces disruption and stagnation in the capitalist production process, crisis, and the destruction of capital”. The overproduction in the container shipping industry has seen a lowering of the rates of profit in what Marx described as “the progressive tendency for the general rate of profit to fall is thus simply the expression, peculiar to the capitalist mode of production”.
When socialism takes over existing world production there will be a practical system of world production, distribution and consumption operating directly and solely for human needs. The world wide container shipping industry would be an integral part of world socialist distribution of goods. The capitalist “anarchy of production” in the shipping industry would be over, “overproduction” would not be a concept recognised in socialism when there is production for use and needs.
Steve Clayton
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