Maersk still sees 2012 loss in container shipping

• Chairman reiterates container shipping loss view
• Says Maersk Line has achieved rate increases
• Says Asia-Europe market share rose to 19.4 pct

COPENHAGEN (Reuters): Maersk Line, the world’s biggest container shipping company, is expected to lose money again this year despite recent freight rate increases, the chairman of parent group A.P. Moller-Maersk said last week.

A.P. Moller-Maersk, the Danish shipping and oil group, said in its annual report in late February that it expected its Maersk Liner Business to have a “negative result in 2012 as a consequence of excess capacity.”

That outlook was given before recent freight rate increases which had led some analysts to expect A.P. Moller-Maersk to upgrade guidance for the container shipping business.

But A.P. Moller-Maersk chairman of the board Michael Pram Rasmussen reiterated the same outlook for Maersk Line in his presentation to the annual general meeting of shareholders.

He also repeated that the A.P. Moller-Maersk group as a whole expected a positive full-year 2012 result, but below the result for 2011.

“Maersk Line will place specific focus on profitability, partly with rate increases and partly with increased competitiveness, achieved through continued savings and efficiency improvements,” Rasmussen told the meeting.

Maersk Line has regained market share lost during the previous downturn and reached a satisfactory level, he said. “The primary focus has therefore shifted to profitability.”

Rasmussen said that Maersk Line regained market share throughout 2011 and ended the year with a global market share of about 15.5%, in line with earlier announcements.

But Maersk Line’s market share on its important Asia-Europe routes rose last year to 19.4% from 17.8% in 2010, and volumes on those routes grew 16%, faster than average market growth of 7%, he told the meeting.

He said Maersk intended to maintain its global market share and pursue its long-term strategy to grow with the market, adding that Maersk Line had made several initiatives in early 2012 aimed at achieving “satisfactory freight rates.”

Rasmussen said that Maersk Line had sought two increases, one of $750 per twenty-foot unit (TEU) and another of $400 per TEU, and it had achieved about $1,000 in total in the increases implemented on March 1 and April 1.

“This is not done, there will be more,” he said.

The rate increases have been supported by Maersk’s 9% capacity reduction on Asia-Europe routes, as announced in February, he added.

“We are reducing the speed of our ships and increasing the number of port visits that we make,” Rasmussen said.

UBS said in a research note to analysts on Thursday that a recent “dramatic” rise in Asia-Europe container freight rates to $1,700 per TEU from around $500 per TEU had “transformed Maersk Line’s fortunes - at least for the moment.”

UBS said it expected A.P. Moller-Maersk to remain cautious in its guidance for Maersk Line when it reports first-quarter results on May 16, but said that the guidance was likely to be beaten because of the recent rate increases.

The bank said that it still expected Maersk Line to post a loss for the first quarter, but rebound to a profit this year of around $1 billion from a loss last year of $600 million.

“With surplus capacity we believe that returns are at best capped and at worst we could return to falling rates if a battle for market share resumes,” UBS said in its note.