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Maersk Line suffers US$116m loss

Maersk Line has suffered a US$116m loss in the third quarter of 2016 as average freight rates fell by 16% year-on-year.

The world’s largest carrier’s third quarter loss compares to a US$264m profit in the same period last year.

The company’s revenue went down by 11% year-on-year to US$5.4bn in the third quarter of 2016 due to the decline in average freight rates to 1,811 US$/FFE (forty-foot equivalent, 1 FFE = 2 TEU).

According to a company statement, container freight rates fell across all trades. “North America, West Central Asia and Africa declined the most but Oceanic and European trades were also notably lower,” the statement continued.

This was partially counterbalanced by Maersk Line gaining market share with an 11% rise in volumes to 5,396,000 teu.

According to the company, the fleet capacity increased by 3.8%, meaning that the increase in volumes “represented an improvement of network utilisation”.

The Maersk Group’s and Maersk Line’s CEO Søren Skou said: “Maersk Line for the second quarter in a row reported a loss due to continued low freight rates, down 16% year-on-year. Freight rates were however up 5.5% quarter-on-quarter, for the first time since Q3 2014.

“Maersk Line performed strongly on volume and unit cost.”

The Maersk Group’s port operator APM Terminals reported a 25% year-on-year fall in its profit, from US$175m in the third quarter of 2015 to US$131m in the same period this year.

The business’s revenue went up by a negligible 1.5% year-on-year to US$1.06bn in the third quarter of 2016.

The number of terminals operated by APMT increased from 61 in the third quarter of 2015 to 72 in the same period this year, with containers handled going up from 8.9m to 9.5m teu. The increase is mainly due to the acquisition of Grup Marítim TCB completed in March 2016.

“Excluding the Grup Marítim TCB acquisition and terminals divested during 2015, APM Terminals handled 1.5% more volumes than in the same period last year, mainly driven by growth in Salalah, Oman and Maasvlakte II, Rotterdam, the Netherlands,” a company statement read.

“The Maersk Group delivered an underlying profit of US$426m in the third quarter of 2016,” Skou said, “the result is unsatisfactory, but driven by low prices.”

In September this year, the Maersk group announced that it will split into two separate businesses, an integrated transport and logistics division and an energy segment.

A.P. Møller – Mærsk A/S, which will focus on delivering transportation and logistics services as an integrated transport and logistics company, will include Maersk Line, APMT, freight forwarder and supply chain manager Damco, towage and emergency response provider Svitzer and reefer manufacturer Maersk Container Industry (MCI).

The new set-up will be based on a one-company structure with several brands.

Maersk Line and APMT are set to implement different business strategies, with the carrier concentrating on growing market share through acquisitions and the port operator focusing on cost reduction and utilisation.

According to the group, financial reporting for the new structure will be effective starting from the first quarter of 2017.

Morten Engelstoft replaced Kim Fejfer as CEO of APMT after Fejfer stepped down as member of the management on October 1 and as CEO of APMT on November 1.