Freighting Update – News
MISC throws in the towel on liner trades Billion dollar hit prompts Malaysian shipping line to exit container market
MALAYSIAN shipping giant MISC Berhad is to quit the liner business because of deteriorating condi- tions in the market. The operator said it had lost
US$789 million in the marketplace in the past three years, and that its exit would cost it $400 million – a charge it would take in this finan- cial year and exit the liner trades in June 2012. CEO Datuk Nasarudin Md Idris
said: “In view of the expected larg- er demand for investment in the liner industry, the cost for us to remain relevant in the business is untenable.” The exit underscores the fast-
deteriorating conditions in the container trades. MISC announced its intention to restructure its liner business in January 2010, when it pulled out of the Asia-Europe trades and decided to focus on the intra-Asia market. The plan, MISC said, was to build scale in intra-Asia trades and
review the disposal of “sub-opti- mal assets” in its liner business. Instead – given the rapid col-
lapse of rates and growth of overcapacity, even in the intra-Asia trade lanes – the company has decided to throw in the towel and focus on its core businesses, which include energy transport. What changed its mind, MISC
said, was “the rapid pace at which the industry is changing, led by the push for new investments into even larger vessels in order to max- imise economies of scale and to realise greater cost efficiency”. The phrase is a direct reference
to the deployment of bigger ships by Maersk, MSC and CMA CGM on the Asia-Europe trade lanes, which began earlier this year. This trend, MISC said, “comes at a time when the industry is being plagued by overcapacity and oper- ators are struggling to stay profitable”. According to Lloyd’s List MISC
also said that the decision to exit the liner business had been has- tened by generally difficult operating conditions in shipping. Leaving the liner business will
mean selling ships, withdrawing from trade alliances and ending service contracts. MISC estimated the one-off costs at around $400 million.
The deployment of bigger ships by Maersk, MSC and CMA CGM convinced MISC to quit the liner business
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www.lloydsloadinglist.com
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