The world’s largest container line lost $146m in the four quarter of last year its third consecutive quarterly loss in 2016. As result Mearsk Line reported a full year loss of $376m for 2016 compared to a $1.3bn profit in the previous year.
Revenues fell 13% to $20.7bn in 2016 compared to $23.7bn in 2015, reflecting 18.7% drop in freight rates year-on-year. The average rate per feu was $1,795 in 2016 against $2,209 per feu in the pervious year.
“Maersk Line’s freight rates declined significantly across all trades,” the company stated.
“On East – West (trades), the North American trade declined the most due to increased competition as well as increase in backhaul cargo at lower freight rates. On North South, the West Central Asia trade declined the most, impacted by imbalance from oversupply built up over 2015 and 2016.”
Despite weak freight rates Maersk’s volumes were up 9.4% in 2016 to 10.4m teu compared to 9.5m teu in the previous year.
Commenting on business conditions in 2016 the company said: “The challenging market conditions in the container industry continued in 2016. As a testimony to the situation, for the first time in 30 years, the industry saw a major carrier, Hanjin, go out of business.”
Maersk Line sees two main challenges going forward: demand and supply imbalances leading to low freight rates and digitalisation. However as Maersk Group moves to focus on transport & logistics combining Maersk Line with Damco, APM Terminals and Svitzer as its core business, Group ceo Soren Skou is more upbeat about the future.
“Our top priorities for 2017 remain integrating our Transport & Logistics businesses, taking out cost in APM Terminals and Damco, closing the Hamburg-Süd acquisition, as well as progressing the work on finding structural solutions for each of our oil and oil-related businesses,” Skou said.
“For 2017, we expect A.P. Moller - Maersk to deliver an underlying profit above 2016, mainly driven by an improvement in underlying profit in excess of $1bn in Maersk Line compared to 2016.”
Overall the AP Moller Maersk Group reported a $1.9bn loss in 2016 compared to a $925m profit in 2015.
“2016 was a difficult year financially, with headwinds in all of our markets. However, it was also a year when we decided to substantially transform AP Moller - Maersk for the future. We have set a new course that over the next few years will lead AP Moller - Maersk to become a focused container shipping, logistics and ports company with the aim of growing revenue again,” Skou said.
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