Peak season hopes dashed as freight rates slip again
The prospect of a traditional peak season is slipping away with each week that passes ...
Maersk Line sailed into the red in the final quarter of last year, posting a net loss of $165m for the three months, compared with a profit of $631m in the same period of 2014.
However, a good performance in the first half of the year helped the carrier record a profit of $1.3bn in 2015 – against $2.2bn earned the year before.
“We call it the perfect storm for the group,” said chief executive Nils Anderson in a teleconference this morning, describing the twin impact of plunging oil prices and container freight rates at all-time lows.
Maersk Group’s 2015 profit sank 82% on the year before, to $925m, due to low oil prices, sub-economic freight rates and a $2.6bn impairment hit on its oil assets.
Mr Anderson said Maersk Line’s average freight rate had plummeted by 25% between October and December, versus 2014.
“We had a very bad quarter,”he said. “Our trade mix means we have been hit quite hard.”
Moreover, with trades, especially to Europe, Latin America and West Africa, still under intense freight rate pressure, he did not suggest recovery was likely in the short-term, accepting that there was a further move towards the spot markets from the better-paying and less-volatile contracts.
“We have a long list of very loyal long-term customers that we will endeavour to close contracts with at reasonable rates,” he said, but added that if rates could not be agreed, “we would probably prefer to move towards spot”.
Maersk Line carried 19m teu last year, compared with 18.9m in 2014, at an average rate per 40 ft of $2,209 – down from 2014’s $2,630 – but the average rate had dropped to $1,941 per 40 ft by Q4 15.
The carrier paid an average of $315 per tonne for its bunker fuel in 2015, compared with $562 the year before, but this saving was passed back to shippers in the form of rate discounts to fill ships.
To mitigate weak demand and low freight rates, Mr Anderson said, Maersk Line would continue the capacity management strategy that saw the carrier close four services and cancel around 110 sailings last year.
He expected more chartered-in containerships would be returned to owners this year, as agreements expired, to be replaced by owned tonnage – 84,000 teu was returned in 2015. He said that it was the policy of the line to agree relatively short-hire periods in order to enjoy this flexibility.
Maersk’s outlook for its container line this year is a result “significantly below” 2015, based on weak global growth forecasts of between 1% and 3%.
Meanwhile, there was a robust performance from APM Terminals, which delivered a net profit to the group of $626m, compared with $849m in 2014, despite a throughput decline of 5.9% to 36m teu – mainly the result of lower import volumes into West Africa, Russia and Brazil.
But perhaps the most pleasing result, said Mr Anderson, was from forwarder Damco, which, following a painful restructure, achieved a profit of $15m last year, following two years of losses.
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