As if to underline the current global trade rebound, the world’s largest container shipping company, A.P. Moeller-Maersk reported today that it charged back to a profit in the first half of 2010.
Maersk swung from a $540 million loss in the first half of 2009 to a $2.52 billion profit in the first half of 2010. They even hiked their guidance, for the second time in recent months according to the Journal of Commerce.
They now expect full year profit to exceed $4 billion. Average freight rates have rebounded hard, thanks to a pick up in global demand, hitting $2,986 per 40-foot container from $2,288 in the first half of 2009. A snapshot of their results is below.
Moreover, it’s important to note that Maersk has done well despite container shipping owners rushing idle ships back onto the market during the first half, thus increasing the shipping market’s supply:
The positive development in demand for container transport, which began in the first quarter of 2010, con- tinued throughout the second quarter. On the intercontinental routes served by Maersk Line and Safmarine, the number of transported containers increased by approximately 13% in the first half of 2010 compared to the same period of 2009.
As a result of improved market conditions, the number of laid up vessels was reduced to approximately 2% compared to 12% at the end of 2009, which is the low- est level since December 2008. Delivery of new vessels and redeployed vessels led to increasing capacity. The measures taken by major shipping companies in 2009 to reduce service speed, thereby cutting fuel consumption, continued in the first half of 2010.
There thus seems to be little slack left in the system, given most of the idle capacity is back. Newly built ships will have to provide additional supply growth.
Rising cargo volumes in the first half of 2010 led to a lack of containers, which the industry is remedying by ordering new containers. The lack of containers is expected to con- tinue throughout peak season in the third quarter 2010.
Keep in mind that this shortage of containers is something we had highlighted back in March. It’s thus been a protracted problem, and according to Maersk one that won’t go away soon.
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