In its annual report Maersk Group said its container line, the world’s largest, reported a $1.3bn profit for 2015, lower than the $1.6bn forecast by the company 23 October last year, when it cut its expected full year result from the $2.2bn it previously said it expected. The $1.3bn profit for 2015 compared to a $2.3bn in 2014.
In the fourth quarter of 2015 Maersk Line fell into the red with a $182m loss, compared to a $655m profit in the same period a year earlier.
For the year as whole Maersk said that average container freight rates declined 16% to $2,209 per feu compared to $2,630 per feu average in 2014. Looking at the fourth quarter Maersk ceo Nils Andersen said in a conference call that container rates had hit an all time low in the quarter decling 25%. He noted that a decline of $150 per container was a lot to their business. On an annualised basis Maersk says that a $100 per feu drop in freight rates equates a $1bn impact on its profitability.
“The freight rate decline was largely attributable to bunker price savings being passed through to customers and to deteriorating market conditions. Container freight rates declined across all trades except North America, especially in Maersk Line’s key trades to/from Europe and Latin America,” Maersk said.
The company said that container shipping demand growth was between flat and 1% in 2015 over 2014 while the container shipping fleet grew by nearly 8% with a global capacity of 20m teu at the end of the year, of which 7% was idle. “The low growth is primarily due to weaker imports into Europe as well as slowdown in emerging economies.”
Maersk has responded to the weak market conditions by closing down four services, and announcing plans to cut some 4,000 staff by 2017. The company is also exiting the multi-purpose vessel (MPV) segment in Q1 2016 have agreed to sell its five MPVs.
At the end of 2015 Maersk had a fleet of 285 owned vessels with a capacity of 1.8m teu and 305 chartered vessels totaling 1.1m teu.
Looking ahead market conditions are not expected to improve in 2016. "Maersk Line expects an underlying result significantly below last year ($1.3bn) as a consequence of the significantly lower freight rates going into 2016 and the continued low growth with expected global demand for seaborne container transportation to increase by 1-3%," it said.
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