Global shipping woes deepen as Maersk issues profit warning
A profit warning from Danish conglomerate, Maersk, is the latest in a series of dire forecasts from the global container-shipping industry, since it has served as a bellwether, not just for the industry but also for global trade in general.  The company is now expecting earnings to come in at $3.4bn this year, compared to original expectations of $4bn, and its 3Q2015 net profit was $778m, compared to $1.47bn YoY.   A slowing growth in China and the eurozone's economy downturn has pushed freight rates to levels that barely cover fuel costs; they are now around $300-a-container on the main Asia-to-Europe trade loop, which is a big drop from the $1,300-a-container average that ship operators say they need to break even in the long term.  SeaIntelligence Consulting's Lars Jensen says he is just surprised the profit warning had not come earlier: "This is going to be an industry wide issue this year".

Declining freight rates in the main east-west tradelanes have seen Maersk Group be forced to issue a full year profit warning.

The previous expectation, as announced in the Danish firm’s Q2 report, was based on an underlying result contribution from Maersk Line above $2.2bn. The group now expects an underlying result from Maersk Line of around $1.6bn.

Maersk said it expects freight rates to have declined on average by $100 per feu by the end of this year and for it to have shifted 100,000 feu less than initially expected.

All other business units, such as offshore and tankers, maintain their result guidance for 2015.

“It is regrettable that we have to adjust our expectations for the 2015 result. All of our business units delivered a positive result in the third quarter, despite difficult conditions across our industries,” said group ceo Nils Andersen.

“The container shipping market has deteriorated beyond the Group’s expectations especially in the later part of Q3 and October and the Group does not expect market recovery in 2015,” the company said in a release.

Commenting on the profit warning, Lars Jensen from SeaIntel and a columnist for this site, said: “My view is that it reflects a combination of the poor peak season on the Asia-Europe trade as well as the overcapacity problem having spread to most main trades globally. I expect this is an issue which is not only related to Maersk Line but is an issue for the entire industry.”