mana.ir

According to MANA, reports from the first batch of container carriers to announce first-quarter results show that, despite hopes of a turnaround in the sector’s fortunes, the market is proving tougher than expected this year.

Maersk, a bellwether container line, announced a net loss of $239m for the first quarter of 2018, despite rising volumes and revenues across its four operating units.

Its ocean segment, which includes its container line and gateway terminals, reported volume growth of 23%, but the headline figure was boosted by the inclusion of volumes from Hamburg Süd. With these stripped out, Maersk volumes were up just 2.2%, below the estimated global market growth of 3%-4%.

The impact on the bottom line was visible.

While Maersk no longer breaks out its carrier’s profit and loss, earnings before interest, tax, depreciation and amortisation were $492m. That is not much more than the $484m it made in the corresponding quarter of 2017, when container shipping was going through its darkest hour, just six months on from the collapse of Hanjin Shipping.

Things were supposed to be better now.

Last year, nearly all major container lines managed to turn a profit, many for the first time in several years.

As those annual results were released, chief executives the world over were painting a picture of recovery, stability and growth.

To date, however, Maersk, Hapag-Lloyd, Hyundai Merchant Marine and Yang Ming have all posted negative results for the first quarter.

First-quarter results are often poor, as they include the post-Christmas slump and the closure of Chinese manufacturing during the Lunar New Year celebrations.

But Maersk’s results put paid to one of the main reasons carriers were optimistic that a recovery would come this year.

Despite an increasing amount of tonnage being delivered, lines claimed that global demand growth of 5%-6% would be greater than global supply growth.

That calculation is now called into question. While deliveries will tail off in the second half of the year, it will not be long before another set of orders comes out of the shipyards of South Korea and China to add more capacity to the fleet.

Moreover, global instability is rising, and with it, oil prices.

That means higher bunker costs for carriers, and higher prices for consumers, who will have to choose between paying for petrol or buying imported goods.

Speaking at the Global Liner Shipping conference in Hamburg this week, Ocean Network Express chief executive added his voice to the concerns. ONE only launched in April and has not reported any financial figures, but Jeremy Nixon said that while he expected the line to make money this year, it might not be easy.

“Clearly we had a difficult first quarter in volumes, the spot market and the fuel prices, which has picked up in the last few weeks,” he told the conference. “We didn’t budget for these levels. If it continues through rest of the year, it will put significant pressure on all carriers.”

The jury was still out, he added.

“A lot of work will have to be done to make a good profitable year that we expected in 2018.”