PANAMA CITY – Denmark’s Maersk Line, the world’s largest container shipping company, plans to boost its market share in Latin America and is undeterred by the region’s current economic troubles, a senior company executive told EFE.
“Latin America is one of the regions where the shipbuilding industry has the biggest opportunity. We want to grow here,” the group’s new CEO for that region, Pakistan’s Omar Shamsie, who previous headed up Maersk Canada, said in an interview in Panama.
Shamsie’s move to Latin America is part of the group’s strategy for a region that is currently undergoing a period of economic deceleration – with projected 2015 growth of less than 1 percent – and has been hard hit by a slowdown in China, “one of its main trade partners.”
“We won’t see double-digit growth rates in Latin America in the coming years. There will be countries that are going to keep growing, like Mexico, but there are others like Argentina and Venezuela that are having difficulties. It’s very important for us to learn to operate under this new scenario,” Shamsie said.
Latin America accounts for 10 percent of the total sales of the Copenhagen-based company, which operates more than 600 container vessels worldwide and posted more than $6.25 billion in revenue in the first quarter of 2015.
Recent global economic woes have triggered some changes in the container shipping business model, including significantly reducing route duration, Shamsie said.
“In the previous decade, you saw lots of ships out at sea traveling from one continent to another. Now there’s more intra-continental movement. And that’s where Mexico has a great opportunity because a lot of manufactured goods are once again being made there,” the executive said at Maersk’s regional headquarters in Panama City.
Mexico has been able to position itself as an alternative to China in the production and distribution of manufactured products and, along with Brazil, Chile and Colombia, is “the country in the region with the most potential.”
But that potential will not be realized if Latin America does not invest in port infrastructure and in improving connections between terminals, the executive warned, noting that the Maersk Line vessels that dock in (that region) are not the company’s biggest “because the ports are not prepared for that.”
Two years ago, the Danish group altered two important shipping routes that had passed through the Panama Canal, instead using the Suez Canal because of its ability to handle larger ships.
A third set of Panama Canal locks that will be able to handle much larger ships, known as post-Panamax vessels, will be ready in 2016.
Shamsie did not confirm whether Maersk Line will increase the number of ships that traverse that inter-oceanic waterway once its $5.25 billion expansion is complete, although he said it will “allow us to offer more services to our clients.”
“To derive the greatest benefit from the expansion, adequate port infrastructure to handle the additional cargo and good connections among terminals will be needed. Panama has the opportunity to do all of that and should take advantage of it,” the executive said.