Eivind Kolding, head of the box ship division of the A.P. Moller-Maersk oil-to-shipping group, said that a recent boom in freight volumes was caused by companies rebuilding their inventories and not new demand.
Kolding runs Maersk Line, which is often seen as a weather vane for global trade. At any given time, its liners transport 14 percent of the boxed goods criss-crossing the globe.
"The underlying driver -- consumption -- is not really coming up. Consumption, both in Europe and the U.S., is still quite modest," Kolding said in an interview at his office overlooking an old navy base at Copenhagen harbour.
"So there is a risk, when the inventory correction has been completed, maybe towards the middle of the second quarter, that developments will be flat."
The OECD said in its latest global forecast world trade would rise by six percent in 2010, but U.S. and European economies would remain subdued as consumers exercise restraint after past spending sprees. Kolding, who repeated a company estimate given last week that Maersk Line would make a small loss this year, is well placed to know what volumes represent inventory rebuilding and what are based on demand.
"Our first source of intelligence is really the dialogue we have with our customers. We try to pick up as much as we can from them and create a picture of what's going to happen."
Those customers are not yet benefiting from a return of consumer spending and have been telling Maersk Line that they have control of costs but are struggling to boost revenues.
Still, Kolding said companies across different sectors and geographies had started to build their inventories again.
Freight rates and volumes were returning to levels seen just before Chinese New Year. Some analysts had wondered whether January and February's gains would be sustained.
'Putting Bananas to Sleep'
On top of uncertainty about demand, there are also questions about supply, with so much idle tonnage now. Kolding expects liner companies to be disciplined and not add too much tonnage but that too represents a risk to his business.
"We will not add a lot of extra capacity, which takes months to put in place, just to see that when it gets there, the business has gone. So we'll have to play it a bit more cautiously."
Maersk Line lost 11.2 billion Danish crowns ($2.07 billion) in 2009, tracking rivals such as South Korea's Hanjin Shipping and Singapore-listed Neptune Orient. It dragged Maersk Group into the red for the first time in 105 years..
Kolding was optimistic about the long-term outlook for container shipping.
He said historically trade grows faster than the world economy, helped by trends such as outsourcing, which required more transport. Growth may not return to the 10 percent rates of the past but should hit perhaps something like 7-8 percent.
Maersk is also focused on innovation, including new technology for reefer vessels, which ship fresh produce. Maersk now has a method for treating bananas so that they can be shipped over as much as 50 days and still stay fresh.
Kolding said it involved effectively "putting bananas to sleep". For Maersk, that means winning some business from airlines which have had more of a lock on perishable goods.
Longer-term concerns included modernising the way clients do business and focusing on the environment.
"We want to be able to make it as simple to book a container with Maersk as to buy a book on Amazon," he said. (Reuters)
