Shipping has taken a hammering in the past five years, hit both by the broad weakness of the global economy and a just and a surge in orders for huge new container vessels by major shipping companies just as the 2008 financial crisis hit.
Maersk Line vessels make up around 15% of world container shipping capacity and the company said its container shipping unit swung back to a US$204m profit in the quarter from a US$599m 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.
CEO Nils Smedegaard Andersen said he had “no doubt” Maersk Line would be successful in its plans to hike rates from the current US$731/teu to US$1481/teu from July 1.
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 2-4% from 4-5% 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 & Marine Engineering.
The slump of around US$400 in spot rates, a 36% 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.