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Maersk Line hit by first half loss of $114m

Maersk Line hit by first half loss of $114m
Maersk Line, the world’s largest container carrier, saw its first half results reversed into the red in challenging market conditions.

The container arm of Denmark’s AP Moller-Maersk reported a net loss of $114m in the six months ended 30 June 2016, as against the profit of $1.22bn in the previous corresponding period.

First half revenue was recorded at $10.04bn, down from $12.52bn in the year-ago period due mainly to decline in freight rates but partially offset by higher volumes carried.

“The freight rate decline was mainly attributable to lower bunker prices and weak market conditions,” AP Moller Maersk said in its results announcement.

“Container freight rates declined across all trades. North America and West Central Asia declined the most but African, Oceanic and European trades were also notably lower. The decline in North American average rates reflect increased competition, but is also impacted by increased backhaul volumes at lower rates in Q2 2016,” the group explained.

The group added that West Central Asian, Oceanic and European trades were impacted by market imbalance whereas African trades were mainly impacted by weak demand.

Amid the challenging environment, the industry has continued to see steps towards consolidation through mergers and acquisition as well as formation of large scale alliances.

Maersk Line itself partnered with Mediterranean Shipping Company (MSC) to form the 2M alliance since the start of 2015, with the potential inclusion of Hyundai Merchant Marine (HMM).

At at end of the second quarter, Maersk Line’s fleet consisted of 283 owned containerships and 347 chartered boxships with a total capacity of 3.14m teu. Its idled capacity stood at 44,000 teu from four vessels.

The group AP Moller-Maersk, meanwhile, saw its first half profit plunged by 87% year-on-year to $342m due primarily to lower freight rates and oil prices.