Excerpts from the Wall Street Journal:
The Wall Street Journal reported the impending Cosco order in April. At the time, some senior company executives had reservations about following bigger competitors—including Maersk Line, a unit of Denmark’s A.P. Møller-Maersk A/S, Switzerland-based Mediterranean Shipping Co. and France’s CMA CGM SA—that already operate dozens of such behemoths.
Container shipping, which moves 95% of all manufactured goods, has been in the doldrums over the past decade. An estimated 30% overcapacity in the water has sent freight rates to levels that at times don’t even cover the fuel cost of moving the containers across the oceans. China’s economic slowdown this year and anemic growth in Europe have exacerbated fears that ordering such large and expensive vessels might backfire.
“Cosco’s concerns were well-founded, but at the end they have to keep up with their bigger rivals if they are to compete in the Asia-to-Europe route,” said Lars Jensen, chief executive of SeaIntelligence Consulting in Copenhagen. “Over the next couple of years, any ship carrying below 12,000 boxes won’t be able to compete in terms of cost.”