Maersk Line is set to reap the rewards of improving global trade conditions especially if early signs of a recovery in demand on the key Asia-Europe container lane boost liner returns, according to one analyst.
Research by Drewry Maritime Equity Research found that the unexpectedly high trade growth of 2Q14 from Asia to Northern Europe had continued into the early part of the 3Q14 peak season, with high utilisation of around 90% helping carriers achieve peak season General Rate Increases.
Maersk Line, with around 15% of global container capacity, would be “the key beneficiary” among shipping lines if global trade volume gains maintained momentum and freight rates recovered.
“Maersk Line’s key trade lane of Asia-Europe is already showing early signs of renewed growth with year-to-date volumes up a significant 8%, surpassing our expectations,” said Rahul Kapoor, Director-Equity Research at Drewry.
“On the freight rates front, even as 2014 contracts were signed for weaker rates, spot rates have shown a positive trend with significantly higher yearly averages.
“We expect higher volume growth and a decline in freight rate volatility to provide continued earnings visibility for Maersk Line in the next few years as the container shipping demand-supply balance returns to equilibrium.”
Last month the A.P. Møller-Mærsk Group announced a net profit of USD$2.3bn for the second quarter.
Maersk Line positively surprised investors with a profit of USD$547m, compared to profits of USD$439m and 454m in 2Q13 and 1Q14, respectively, as liftings increased 8.9% year-on-year and average freight rates rose 0.6%.
Kapoor said lower bunker costs and consumption, a major cost saving program implemented from 2012 onwards and the introduction of more efficient Triple E vessels that consumed 15% less fuel than older ships had left Maersk Line well positioned to further improve performance.
“We believe the magnitude of cost cutting over the last couple of years combined with increased volumes, which are higher than its peers, point to a very good year for Maersk,” he adde
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.
