Maersk plans to double freight charges
Copenhagen, May 18, 2013
A P Moller-Maersk, owner of the world's biggest container shipping company, is "100 per cent certain" it can more than double freight rates in July despite market weakness that has seen prices fall by a third since March.
Shipping has taken a hammering in the past five years, hit both by the broad weakness of the global economy and a boom in orders for huge new freighters put in by major players just as the 2008 financial crisis hit.
The Danish group, whose Maersk Line vessels make up around 15 per cent of world container shipping capacity, however, said its container shipping unit swung back to a $204 million profit in the quarter from a $599 million loss a year earlier, beating forecasts.
While those results benefitted from briefly improved prices, Maersk and other major players are now desperate to raise the industry's traditionally volatile rates, after a fall in the past two months that left most trading at a loss.
Chief executive Nils Smedegaard Andersen said he had "no doubt" Maersk Line would be successful in its plans to increase rates to $1,481 per twenty-foot container from July 1, from $731 currently.
Those spot rates, however, are traditionally only a basis for negotiation with clients and he also admitted that the outlook for the industry was bleak. The company cut its forecast for a rise in demand in 2013 to two to four per cent from four to five per cent earlier.
"To be honest, we just have to get used to the fact that these are harder times, and that there will be harder times ahead," Andersen said at a teleconference.
Market capacity is also expected to increase significantly later this year, not least when the first of Maersk's 20 new mega vessels is delivered by Korea's Daewoo Shipbuilding & Marine Engineering.
The slump of around $400 in spot rates - a 36 per cent fall - since March had fuelled speculation that Maersk, which traditionally offers a conservative financial outlook, could be cutting 2013 expectations.
"The fact that they keep their outlook unchanged at a time when Asia to Europe freight rates are at an absolute low, is an important signal (for the full year results)," said Sydbank analyst Jacob Pedersen.-Reuters