AP Moeller-Maersk A/S may be the only shipping line to profit from growing trade between Asia and Europe even as rates reach a two-year low.
While Maersk is ordering the world’s biggest ships for the routes, companies such as Hapag-Lloyd AG may lose out, said Ben Gibson, a freight derivatives broker in London at Clarkson PLC, the world’s largest ship broker. Maersk, the largest container shipping line, was probably the only major operator to make money on Asia-Europe trade in the first quarter, Gibson said to Bloomberg.
Container lines have contracted for new ships with capacity equal to 24 percent of the existing fleet, according to data from the Paris-based provider Alphaliner.
The price of carrying containers to northern European ports from Shanghai has dropped to $874 a standard box, the lowest since July 2009. The peak was $2,164 in March last year, according to data from the Shanghai Shipping Exchange.
“It’s a very tough freight lane at the moment, but Maersk is definitely in a better position than its rivals because of its size,” said Jacob Pedersen, an analyst at Sydbank A/S. He has an “overweight” recommendation on Maersk’s stock, writes Bloomberg.
The Copenhagen-based company’s shares have gained 7.7 percent since container freight rates peaked on March 5, 2010. Maersk shares have fallen for four straight days amid investor concern about rate competition.
“Maersk is leading when it comes to having the lowest costs for each transported container and is therefore in a better condition with the current low rates,” said Jesper Langmack, managing director at PFA, Denmark’s second-biggest fund.
PFA, which has about 250 billion kroner ($50 billion) in investment assets, returned 37.1 percent on Danish shares last year, compared with a 32.7 percent gain for all of the country’s stocks including dividend payments.
Langmack’s portfolio had Maersk shares worth about 700 million kroner at the end of 2010.
On Feb 21, Maersk ordered 10 vessels capable of carrying 18,000 containers from Daewoo Shipbuilding & Marine Engineering Co, and has an option to order 20 more. The ships will be about 30 percent bigger than the largest vessels now in use.
Hamburg-based Hapag-Lloyd AG, Europe’s fourth-largest container line, is grappling with surging fuel prices and increasing competition that culminated in a first-quarter net loss of 22.1 million euros ($32.3 million), according to Bloomberg
The “rise in the oil price, the weak US dollar and growing competition are making business more difficult,” Michael Behrendt, chairman of the executive board of Hapag- Lloyd, said in an earnings statement on May 12.
The German shipping company aims to balance higher fuel costs by increasing prices, Behrendt said. Volume on Far East routes was down 8.5 percent as the company declined lower-priced contracts.
Crude oil is up 10.1 percent this year to more than $100 a barrel while the euro reached a one-month high against the dollar on June 7.
Wan Hai Lines Ltd and Pacific International Lines Private Ltd, which have about 2.9 percent of the container market, said in a May 31 statement that they would stop service on the Asia-to-Europe route and instead slot charter space on China Cosco Holdings Co container unit.
Supply-driven
Some 154 ships with capacity above 10,000 standard containers will start operating between 2011 and 2014, according to Eurogate GmbH & Co KgaA, Europe’s largest port operator.
“The current fall of container freight rates on the east-west routes is supply-driven, not demand-driven,” said Damas.
Bloomberg News
