Citing low freight rates as a key cause, Maersk Group, one of the largest ocean-freight and terminal operators in the world, saw profits and revenues decrease in the third quarter ended Sept. 30 compared to the year-ago period.
Maersk, based in Copenhagen, said it continued to be significantly impacted by market imbalances, leading to sustained low container freight rates and a low oil price environment.
Maersk’s profit in the period fell 44 percent to $438 million, compared to $778 million in the third quarter of 2015, negatively impacted by lower container freight rates partly offset by positive impact of termination fees in Maersk Drilling.
Revenues in the quarter decreased 9.2 percent to $9.18 billion from $10.11 billion a year earlier, predominantly related to Maersk Line, which saw revenues fall $659 million on 16 percent lower average container freight rates, and declined in Maersk Oil, Damco and Maersk Tankers units. This was partly offset by 11 percent higher container volumes in Maersk Line and 7 percent higher volumes in APM Terminals.
Maersk said it continues to focus on cost efficiency, as well as maximizing synergies between its business units to improve operational performance and remain a top-tier performer.
“Maersk Line for the second quarter in a row reported a loss due to continued low freight rates, down 16 percent year-over-year,” said chief executive officer Søren Skou. “Freight rates were, however, were up 5.5 percent quarter-over-quarter for the first time since the third quarter of 2014. Maersk Line performed strongly on volume and unit cost. APM Terminals delivered a result below last year, as we continued to be challenged by low volume growth on a like-for-like basis.”
The company said Maersk Line, a major carrier of apparel and textile imports with 590 owned and operated vessels, continued to deliver on strategic objectives in the quarter, gaining market share with a volume growth of 11 percent and continued improvement in network utilization. Sustained pressure on container freight rates led to a decline in average freight rates of 16 percent to $1,811 per forty-foot equivalent units from $2,163 FFE, partially offset by an 11 percent increase in volume.
The freight rate decline was mainly attributable to decreasing bunker prices of 25 percent, but was also impacted by the increased backhaul volumes and continued weak market conditions.
In line with previous expectations, Maersk Group still expects a profit significantly below last year’s $3.1 billion.
Maersk Line still expects an underlying result significantly below last year’s $1.3 billion. Maersk Line expects global demand for seaborne container transportation to increase about 2 percent.