COPENHAGEN • The owner of the world's biggest shipping line says negative interest rates are hurting the industry by delaying the consolidation wave so badly needed.
The monetary policy environment "means consolidation will be much slower because it's easy for banks to keep weak shipping companies above water", Mr Nils Smedegaard Andersen, chief executive officer of AP Moeller-Maersk, said in an interview yesterday.
It is the latest example of how negative interest rates are distorting markets and potentially even slowing growth. The policy has so far had limited success in reviving inflation while money managers in countries with negative rates warn of the risk of asset price bubbles.
With the unintended consequences including a slower shipping recovery, questions as to the policy's efficacy are bound to persist.
"Politicians aren't making the reforms that are needed and are leaving it to the monetary policymakers to solve the economic problems that many countries face with low competitiveness and low investment levels," Mr Andersen said. A reliance on cheap finance in container shipping has led to "many negative effects", he added.
The monetary policy environment "means that consolidation will be much slower because it's easy for banks to keep weak shipping companies above water", Mr Nils Smedegaard Andersen, chief executive officer of AP Moeller-Maersk, said.
The shipping industry does not have the buffers to deal with more hurdles. Container lines are "staring at a terrible 2016", with a slowdown in global trade volumes, low freight rates and overcapacity, Drewry Maritime Equity Research said in a report last month. It estimates the industry will lose US$6 billion (S$8.2 billion) this year.
Global shipping lines are increasingly forming alliances to help cut costs and underpin freight rates. Last month, CMA CGM and three other big lines signed a preliminary deal to form a new group called Ocean Alliance, which could become the second biggest after Maersk Line's partnership with Mediterranean Shipping.