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Maersk Line reports a third quarter loss of USD 116 million

Maersk Line reported a third quarter (Q3) 2016 result that is USD 380 million lower than Q3 2015. The overriding reason for the loss is decline in freight rates compared to Q3 2015. Revenue in Q3 was USD 5,359 million, which is 11% lower than Q3 2015 (USD 6,018 million).

Volumes were 11% higher as Maersk Line was able to win market share. Amongst others due to increased volumes following, Hanjin’s court receivership filing, increasing customer focus on financially solid carriers and increased volumes on back haul services.

Maersk Line’s capacity grew 3.8%. Maersk Line continues to manage capacity tightly resulting in high utilisation.

Maersk Line maintains its 2016 full year expectation of a significantly lower underlying result than for 2015 (USD 1.3bn) with the specification that the underlying result is expected to be negative.

“In the third quarter we made a loss, which is unsatisfactory. However, we continue to deliver on our growth and cost objectives. We won market share, we continue to take out cost and increase our utilisation,” says Pierre Danet, CFO of Maersk Line.

The container shipping demand growth was about 2% and the global container fleet (capacity) growth was about 3.3%. The gap between capacity entering and exiting the industry was the lowest in many quarters.

Compared to Q3 2015, Maersk Line’s average freight rate declined with 16%. However, for the first time since Q2 2014 it increased quarter-on-quarter with 5.5%.

“We have indications that rates may have bottomed out. Compared to the previous quarter, our rates increased, which is something we have not seen in the last two years. Furthermore, we expect that the more balanced supply and demand situation will lead to a more sustainable industry. So there are definitely encouraging signs,” says Pierre Danet, but also cautions.

“The market situation is still very challenging, our current rate level is unsustainable and demand remains low. That is why we will continue to manage our capacity efficiently, and have our already announced rate increases this month,” concludes Pierre Danet.

Maersk Line is part of the newly established Transport and Logistics division. The division will help Maersk Line improve the product offering and customer experience through innovative and digitalised solutions and services.

Maersk Group Interim Report 3rd Quarter 2016:
http://investor.maersk.com/financials.cfm

 

Source: Maersk Line

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