The new chief executive of Neptune Orient Lines, the shipping group seen as frontrunner to buy Germany's Hapag-Lloyd, has acknowledged his company needs to grow bigger.

Ron Widdows was appointed chief executive of Singapore-based NOL on Monday after Thomas Held, his predecessor, left unexpectedly "by mutual consent".

Mr Widdows refused to discuss whether or not NOL would buy Hapag-Lloyd, whose position in Tui, the shipping and tourism group that owns it, was under review. He also declined to comment on reports that the company is raising $5bn to $7bn in preparation for a bid for Hapag-Lloyd.

However, Mr Widdows acknowledged the container shipping industry was likely to consolidate further and that there would be significant advantages for NOL in being bigger than at present. APL, NOL's shipping line, operates the world's eighth-largest container ship fleet, while Hapag-Lloyd is world number five.

Larger container lines could be far more cost competitive because they could achieve economies of scale, Mr Widdows said.

"Companies in our industry that are around our size have to be looking at how you improve your cost competitiveness and in order to do that you have to get sizeably larger over time," he said. "Whether that comes about through a more aggressive approach to organic growth or as a function of merger and acquisition . . . you're going to have to get a better cost structure."

Mr Widdows also acknowledged that he had been put in place largely because of his operational know-how. His experience includes significant involvement in the complex 1997 merger that gave NOL its present shape, between NOL and Oakland-based APL. Mr Held, who lasted only 20 months, was an expert in the non-core logistics business. NOL also has a sizeable container terminals business.

"Based on where we are now in our strategic thinking, the largest investments that we will make - whether organically or not - will be around the shipping more than the logistics or terminals lines of business," Mr Widdows said. "We will continue to invest in those other areas no doubt, but the biggest investment and largest risk is surrounding the core shipping activity."

Referring to NOL's board and his operational expertise, he said: "Having someone who has got a greater capability in that particular area is what they seem to have felt comfortable with at this point."

Mr Widdows has been the most prominent sceptic in the industry about many lines' moves towards using far larger ships. He defended his stance, even though NOL has fallen behind competitors in fleet size because of its reluctance to order the latest, largest ships.