Maersk Results Reflect Difficult Shipping Market

Sept. 8, 2009
A clear indication of how difficult the ocean shipping market has become, A.P. Moller-Maersk Group, parent of the world's largest container shipping line, saw revenues drop $8 billion in the first half of 2009 vs. first-half 2008

A 25% drop in revenues in the first half of 2009, compared with first-half 2008, translated into a 48% decline in profits for A.P. Moller-Maersk Group. The parent of the world's largest container shipping company also saw before-tax profits for the period swing from $6.5 billion in 2008 to $1.1 billion in the current first half.

The company said, “In the first half of 2009, the global economic crisis had a severe negative impact on the activities of the A.P. Moller–Maersk Group. Freight rates and volumes for the Group’s container shipping activities were 30% and 7%, respectively, below the same period of 2008, and average rates for the tanker activities were considerably lower than in the first half of 2008.”

Container shipping revenues for the first half dropped from $14.0 billion to $9.8 billion. Total volume of 3.3 million forty-foot-equivalent units (FEUs) was a decrease of 7% over the same period in 2008. Fuel was a saving grace in that bunker prices dropped 44% from the extremes of 2008.

The company reported container volumes in the second quarter were down 10% over the second quarter of 2008, which was less of a decline than in the full first half (12%). However rates continued to fall in the second quarter “from the record-low level in the first quarter,” said Maersk. But the curve had begun to flatten towards the end of the period, the company said. “The trend is now expected to reverse, with rate increases, albeit modest, in the third quarter of 2009. However, considerable general rate increases are required for the container market to become profitable again. At present, approximately 10% of the total global fleet, measured in terms of shipping capacity, has been taken out of service as a direct consequence of the market conditions.”

The company stated, “The Group’s container shipping activities are affected by the very unfavorable market conditions, and transported volumes fell by 7% in the first half of 2009 to 3.3 million FEUs compared to 3.5 million FEUs in the first half of 2008. In the second quarter of 2009, volumes decreased at a slower pace, and during this period transported volumes were 3% below the second quarter of 2008. Overall, the market share was retained in the first half of 2009 in the markets where the Group operates. Although volumes are falling less steeply, freight rates fell further and were on average 34% lower in the second quarter than in the same period of 2008. For the first half of 2009 overall, rates were 30% lower than in the same period of 2008.”

About two weeks prior to announcing the interim results, the company said it had appointed Klaus Rud Sejling to the position of Head of Group Strategy Office in A.P. Moller-Maersk. He will assume the role on November 1, 2009.

Commenting on the interim results, Transport Intelligence said, “Maersk reported that the market for containers on the core inter-continental routes fell by 12%, which may indicate that it is cutting rates aggressively to maintain volumes. The key Europe-China route saw a 46% fall in rates compared to the first half of 2008, although rates and volumes saw some improvement in the second quarter. However the company has also cut costs by reducing its workforce and improving fuel efficiency.”