By Mike Wackett
Maersk Line sailed into the red in the final quarter of last year, posting a net loss of $165 million for the three months, compared with a profit of $631 million in the same period of 2014. However, a good performance in the first half of the year helped the carrier record a profit of $1.3 billion in 2015 – against $2.2 billion 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 per cent on the year before, to $925 million, due to low oil prices, sub-economic freight rates and a $2.6 billion impairment hit on its oil assets. Mr. Anderson said Maersk Line’s average freight rate had plummeted by 25 per cent 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 19 million TEUs last year, compared with 18.9 million 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 the fourth quarter of 2015. 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 TEUs 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 per cent. Meanwhile, there was a robust performance from APM Terminals, which delivered a net profit to the group of $626 million, compared with $849 million in 2014, despite a throughput decline of 5.9 per cent to 36 million TEUs – 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 $15 million last year, following two years of losses.
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk).