Maersk Expecting Earnings Rebound
Sees Better Demand/Supply Balance
Maersk Line expects its net earnings to rebound by over $1 billion from a loss of $384 million in 2016 to a net profit in 2017. The improvement is based on Maersk’s assessment of a recovery in ocean container transportation, according to a recent report from Alphaliner. The shipping line expects container shipping to increase by two percent to four percent, the report said.
According to Maersk, the container market saw a tipping point in the late 2016, with demand rising during the fourth quarter. That could mark the start of a period of strengthening earnings for carriers.
Maersk saw growth of four percent in global container demand in the fourth quarter of 2016 and it increased liftings by 12 percent, in line with its strategy to gain market share.
Maersk’s optimistic assessment contrasts with the tentative forecasts by other industry players. Hutchison Ports cautioned that container volume growth in 2017 remains uncertain due to the policy stance of the new US administration and the continued weak consumer sentiment and high unemployment rate in Europe that could hinder a pickup in the European trades.
MOL cautioned that it anticipates freight rates to decline in March and the carrier adjusted earnings projections downward for its fiscal year forecasts through March 2017.
Competition among carriers remains intense in addition to the uncertainty over demand growth. With the start of the new transpacific service contract season, starting on May 1, several carriers plan to launch new transpacific services in the next two months. The 2M alliance will also launch a new high capacity Far East-North Europe string in April.
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