Maersk Line Profit Amid Overall Decline


Maersk Line has announced its Q1, 2016 profit result, which was US$37 million and 94.9% lower than Q1, 2015 ($714 million) due to weak demand and record low freight rates, however, it is an improvement over Q4, 2015.

Maersk Line’s revenue was recorded at $4.97 billion in Q1, 2016, which is 20.5% lower than Q1, 2015, which saw revenues of $6.25 billion.

This follows news that parent company Maersk Group had seen losses surpassing $1 billion.

Q1, 2016 was characterised by a continuation of the global rate war in container shipping, driven by weak demand and significant supply growth.

The global container shipping demand growth was around 1% and the global container fleet (capacity) growth was above 7%.

Market conditions continue to be very challenging as a result, with its average rate seeing a decrease of 25.5%.

Technical Paper: Maersk Line Q&A

Søren Skou, CEO of Maersk Line, said: “We improved our financial performance compared to the fourth quarter in 2015 despite continued drop in prices. However, our first quarter result is not satisfactory, though as expected.

“In a market with record low freight rates, we won market share, drove down cost and continued to deliver positive free cash flow, enabling us to fund our own growth.”

Maersk Line has announced three new services. Seago Line’s Irish Sea service, SeaLand’s Atlantico service and Maersk Line’s Transpacific TP18 service aims to provide new trade opportunities to customers in Mexico, the US, China, The British Isles, West Africa and the Mediterranean.

The organisational transformation and cost initiatives, announced 4 November 2015, are progressing as planned.

The capacity reductions made in the last half of 2015 are also paying off. Maersk Line has increased utilisation, especially on its services from Asia to Europe.

Utilisation on the trade is expected to remain high. However, rates on the trade are unsustainable, why Maersk Line will continue to work on improving profitability.

Søren Skou concluded: “We expect the market to pick up towards the third quarter of 2016. Our network is now operating with very high utilisation and our vessels are full in the Asia-Europe trade. In this quarter, we expect some upward price momentum ahead of the traditional peak in the third quarter.”

Fact File: Maersk Line is the world’s largest container shipping company, known for reliable, flexible and eco-efficient services. It provides ocean transportation in all parts of the world and serves customers through 324 offices in 115 countries. The company employs 7,600 seafarers and 22,400 land-based employees and operates 605 container vessels.  

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