Maersk Line, the world’s largest container line, suffered a net operating loss of almost US$600 million during the three months ended March 31, 2012, and negative cash flow from operations of US$257 million, despite a significant increase in volumes carried. Volumes rose 22 per cent from 1.8 to 2.2 million forty-foot equivalent units (FEU), but average rates declined 9 per cent from US$2,908 to US$2,646, while the average price of bunker fuel rose by 31 per cent from US$523 to US$685 per tonne. The cost of bunker fuel rose to 30 per cent of revenues of US$6.3 billion. On average, each FEU was carried at a loss of US$263 versus a profit of US$217 a year earlier.
Maersk reported that worldwide demand for container transport grew by 1.3 per cent, and that it maintained its global market share. Maersk blames the continuing high rate of deliveries of newbuilds from shipyards for the softness in container rates. During the first quarter, 47 new vessels were added to the world fleet, including 18 with a capacity in excess of 10,000 twenty-foot equivalent units (TEU). On the other hand, increased idled capacity and demolition mitigated the impact of additions to the worldwide fleet.
Maersk has implemented a number of initiatives to restore profitability, including a general rate increase, a capacity reduction of 9 per cent on Asia-Europe routes through “slow steaming”, the full integration of Safmarine into the Maersk network, and other measures.
During the quarter, Maersk took delivery of six new vessels with a combined capacity of 38,000 TEUs, increasing total fleet capacity to 2.5 million TEUs.
Parent company A.P. Moller-Maersk Group produced a net profit of US$1.16 billion on revenues of US$14.3 billion, and expects full 2012 profits to be slightly lower than the level recorded in 2011 (US$3.4 billion). As for Maersk Line, management expects global demand for seaborne container transportation services to increase by 4 to 6 per cent in 2012 and, assuming its recent rate increases will hold, projects a slight loss during the year, or perhaps break-even.
Although Maersk Line is A.P. Moller-Maersk Group’s largest operating subsidiary, the parent has significant operations in oil and gas production and exploration, container terminal activities, offshore drilling and oil production, tanker shipping, freight forwarding, operation of supermarkets, and other activities.