Maersk Line risks historic deficit
SHIPPING: With bottom low container rates and ships not in use, Maersk Line is risking running into one of the largest economical knock outs in 2009, that a Danish business has ever seen. But a turn might be in sight for next year.
"It looks very unhealthy. Even during good periods container shipping companies are not among the most profitable, and now, they are facing a very tough position. It is not only that the growth rate is declining on the container market, but also that it is negative on the two major services between Europe and Asia and in the Pacific. This is something we have not seen for a very long time, and it is very serious. It will affect the container shipping company's turnover and profit profoundly," says Trevor Crowe, container analyst in the shipping house Clarkson Research.
The low container rates and the declining amount, makes more analysts predict a gloomy 2009 for Maersk Line. A year where the deficit is in risk of reaching 7 billion DKK, one of the largest losses a Danish concern has ever registered.
Henrik Lund, head of analysis at Carnegie recently estimated, that Maersk Line would loose 6.5 billion DKK in 2009. Brian Borsting, head of analysis at LD Markets also predicts a tough year.
"I am expecting a deficit of four billion DKK. I am, however, aware that this number may be even bigger", says Borsting
Maersk Line does not wish to comment on the situation and points out that the shipping company will issue their annual accounts on the 5th of March and is therefore in a so called silent period.
New figures from the Shanghai Shipping Index, which shows the development out of China's largest port and which is regarded as leading tendency for the development on the global container market, show a continuous decline since August. Since then, the index has dropped by almost 23 percent.
But, as we see the end of 2009, things may begin to lighten up.
"The rates are close to the bottom. The container shipping companies are no longer able to cover their variable expenses and they are beginning to pull capacity out of the market by docking ships. But I expect that we have to get closer to 2010 before we will see the rates increase again," says Stephen Rammer, stock strategist in Formuepleje.
Source: The Daily Borsen
