Maersk, CMA CGM explain 2014 operating profit
MAERSK Line, Wan Hai Lines and CMA CGM remain the world’s top performing container shipping lines as demonstrated by the 2014 financial results for 17 of the leading carriers, which show 10 achieved positive operating results, while seven posted losses.
Maersk posted a 53 per cent increase in year-on-year operating profit to $2.34 billion, attributing much growth to a 5.4 per cent decrease in costs due to efficiencies and low oil, said the Alphaliner survey.
The carrier’s total liftings rose 6.8 per cent year on year but this was offset by a 1.6 per cent reduction in average freight rates, it said. Wan Hai posted operating profits of $178 million for last year on revenue of $2.15 billion driven by strong volume growth on the main intra-Asia trade lanes, together with bunker cost savings.
Wan Hai said, it will focus on growing transpacific volumes and also increase its weekly allocation on the transpacific route from 1,500 TEU to 3,700 TEU through the launch of joint services in May. CMA CGM took third place with an operating profit of $973 million on revenue of $16.74 billion, after liftings rose 8.1 per cent last year to 12.2 million TEU.
But this was offset by a 2.7 per cent year-on-year decline in rates. The company explained that it achieved $420 million in cost savings from operational improvements, and $218 million from lower bunker prices.
At the bottom of the pack was CSAV, which posted an operating loss of $185 million for its container shipping activities, based on the results for the first 11 months of 2014, before the transfer of its liner business to Hapag-Lloyd that was finalised in December.
CSAV booked a one-off gain of $619 million in the fourth quarter from the Hapag-Lloyd transaction, but this was solely a paper gain as CSAV received no cash from the deal. CSAV’s results were negatively affected by the weak trading conditions in Latin America, which accounts for 77 per cent of its volume.
Hapag-Lloyd also posted an operating loss of $149 million, compared with an operating profit of $89 million in 2013, without taking into account the one-off charges arising from the merger of CSAV’s container activities. The operating loss stemmed from a 3.2 per cent decline in average freight rates, which was only partially offset by 2.6 per cent lower operating cost per TEU.
APL recorded an operating loss of $143 million in 2014, blamed on $45 million in additional costs caused by the port congestion in southern California in the second half of the year.
The operating results of Chinese shipping lines were mixed, with Cosco reporting an operating profit of $170 million for its container shipping activities in 2014, compared to an operating loss of $210 million in 2013.
But Cosco’s improved results were partly due to government subsidies totalling $224 million from the scrapping of older vessels, which were partly offset by the impairment in the carrying value of the vessels demolished.
CSCL achieved an operating profit of $45 million, which excludes the gains from the government grants and from asset sales. The shipping line’s average freight rates were 1.1 per cent higher on international routes and 3.3 per cent higher on domestic routes.
CSCL’s liftings fell by 1.2 per cent in 2014, as domestic shipping volumes in China were down by 10 per cent, although a 5.5 per cent increase in international volumes partly offset some of the loss. Israeli flag carrier Zim managed to reduce its full year operating loss to $12 million in 2014, down from an operating loss of $161 million in 2013.
The shipping line’s exit from the Asia-North Europe trade last year, as well as a reduction in charter rates for certain vessels as part of its debt restructuring deal with creditors, helped it to lower its operating expenses.
Meanwhile, despite a global schedule relibility dip, Maersk Line has maintained its position as the most reliable carrier in the 2014 third quarter. According to the latest edition of SeaIntel report, Maersk Line retains its top spot despite an industry-wide decline. Maersk Line posted a score of 83.9%, compared to 85.7% in the previous quarter.
Schedule reliability among the top 20 global carriers dropped from 75.5% in Q2 to 71.7% in Q3. Severe congestion issues throughout major hub ports in North Europe, the United States and Asia – particularly Tanjung Pelepas, Hong Kong and Shanghai – are cited as the main reason for the decline.
“We understand that the decline in the ratings is a result of the bottlenecks in the ports,” says Head of Operations Execution Keith Svendsen. “We are pleased that Maersk Line retained its number 1 position.
Our ambition remains to maintain industry leadership in schedule reliability.” For the 10th consecutive quarter, Maersk Line is named best in the Asia – North Europe trade lane with a schedule reliability of 95.5%. In the Asia – Mediterranean network, Maersk Line places second behind CSAV and CMA CGM.
Small carriers in the market, on the other hand, dominate the Transpacific EB route. Two months prior to the implementation of 2M with MSC, Maersk Line is set to deliver a stronger network in the East-West trades for its customers.
To safeguard its stronghold on reliability performance, Maersk Line has put into place, together with MSC, clear parameters. One of the agreed standards for the new network is to deliver upper quartile Schedule Reliability as measured by SeaIntel.
The Joint Coordination Committee to be manned by personnel from both Lines will be tasked to implement agreed procedures, monitor the stability of the network as well as liaise with both MSC and Maersk Line on recovery actions for delayed vessels, and recommend improvements in the overall efficiency of the network.
Meanwhile, global shipping volume handled by ports worldwide is expected to increase to up to one Billion Twenty-Foot Equivalent (TEU) by the end of the decade, up from 623 million TEU in 2013.
Speaking at a seminar in London, Drewry Maritime research senior manager Dinesh Sharma explained that exponential growth anticipated in Asia, and in particular China, will help drive throughput by an average 5.5 per cent, or 40 per cent in total, between now and 2020.,
The current edition of Lloyd’s List explained that to reach the one billion TEU mark during this period transhipment volumes are expected to contribute a large chunk to the total, increasing by 140 million TEU, or 83 per cent, from 175 million TEU at present to 320 million TEU.
Sharma explained that Asia will continue to play a vital role in this volume growth with the demand for cargo continuing to grow from not just the region but also from a rising number of countries that rely on its export trade.
Sharma forecasts Asia’s share in global traffic will increase from its current 56 per cent to as much as 65 per cent by 2020. Meanwhile, China, home to seven of the world’s top 10 largest container ports, will increase its own share from its current 30 per cent to 40 per cent during this period.
Sharma, according to agency report warned that ports both big and small will come under increasing pressure to provide the necessary infrastructure to facilitate this rapid growth in demand, with particular regards to shipping lines upsizing vessels