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Maersk Line back in the black in Q1, container freight rates down 26%

Maersk Line back in the black in Q1, container freight rates down 26%
Maersk Line returned to the black in Q1 with a $37m net profit despite container freight rates declining across all trades in the quarter.

The result marks a turnaround from Q4 2015 when the world’s largest container line fell $182m into the red, however, was it a hefty 94.8% lower than the $714m profit it reported in the first quarter of last year. Revenues were down 20% year-on-year at $4.97bn for Q1 2016 compared to $6.25bn in the same period a year earlier. Nils Andersen, group ceo of Maersk, described it as a "breakeven result" that came "despite very, very tough market conditions".

There was a 26% decline in the average container freight to $1,847 per feu in in Q1 2016 against $2,493 per feu a year earlier.

Commenting on the rate levels Maersk said: “The freight rate decline was attributable to lower bunker prices and deteriorating market conditions. Container freight rates declined across all trades, especially Maersk Line’s key trades to/from Europe as well as Latin America and North America were impacted.”

Maersk said that global demand for container shipping grew by just 1% in the first quarter of the year, while supply of container vessels grew by 7%.

“The industry has recently seen steps towards consolidation from both mergers and acquisition. Over time this represents a potential ease of the supply situation through more disciplined capacity management,” the company commented.

Maersk is continuing with what it described as an “accelerated cost focus”. “This includes efforts to fur-ther reduce cost from transactional work through standardisation, automation and digitalisation of processes to be fully implemented by end of 2017,” it said.

In terms of unit cost Maersk has reduced the cost per feu including VSA income to $2,060 per feu in first quarter 2016 compared to an average of $3,054 per feu in 2012.