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Maersk sees lower financial figures in second quarter

A.P. Moller – Maersk reports a second quarter of 2023 ahead of expectations with revenue standing at US$13 billion, compared to US$21.7 billion in the same quarter last year.

Ocean revenue decreased to US$8.7 billion, driven by a decrease in freight rates and loaded volumes. The company noted that while the volume and rate environment stabilised at a lower level during the second quarter, Ocean sector continued to be impacted by lower demand, driven by a significant inventory correction in particular in North America and Europe.

Furthermore, revenue in Logistics & Services was US$3.4 billion with the sector being impacted by lower volumes due to the continued destocking and weaker consumer demand, as well as low rates.

Moreover, revenue in Terminals decreased to US$950 million, influenced by the normalisation of storage revenue and lower volumes amid lower consumer demand and less congestion in North America.

Revenue

USD million 2023 Q2 2022 Q2
Ocean
8,703
17,412
Logistics & Services
3,386
3,502
Terminals
950
1,124
Towage & Maritime Services
504
579
Unallocated activities, eliminations, etc.
-555
-967
A.P. Moller – Maersk consolidated
12,988
21,650

“The ongoing market normalisation continued through the quarter leading to lower volumes and lower rates,” said the Danish carrier, which raised its financial outlook for the year, expecting now underlying EBITDA of US$9.5 – 11 billion and underlying EBIT of US$3.5 – 5 billion despite a weakened second half market outlook.

Guidance
EBITDA Underlying
(Previously: 8.0-11.0)
US$9.5-11 billion
EBIT Underlying
(Previously:2.0-5.0)
US$3.5-5 billion
Free cash flow at least
(Previously:2.0)
US$3 billion
CAPEX guidance 2022-2023
US$9-10 billion
CAPEX guidance 2023-2024
US$10-11 billion

The profitability during the second quarter was 12.4%, significantly lower compared to the strong Q2 2022. Additionally, Maersk announced that Q2 EBITDA fell to US$2.9 billion and EBIT declined to US$1.6 billion.

Vincent Clerc, CEO of Maersk, commented, “The Q2 result contributed to a strong first half of the year, where we responded to sharp changes in market conditions prompted by destocking and subdued growth environment following the pandemic fuelled years.”

He went on to highlight, “Our decisive actions on cost containment together with our contract portfolio cushioned some of the effects of this market normalisation. Cost focus will continue to play a central role in dealing with a subdued market outlook that we expect to continue until end year.”

Clerc concluded, “While we step this agenda further up, we are unwavering in our transformation and continue to invest in and deliver truly integrated logistics solutions to our customers and amplify their supply chain resilience for the uncertain times ahead.”

Earnings Before Interests, Taxes, Depreciation and Amortization (EBITDA)

USD million 2023 Q2 2022 Q2
Ocean
2,259
9,598
Logistics & Services
311
337
Terminals
331
400
Towage & Maritime Services
59
81
Unallocated activities, eliminations, etc.
-55
-89
A.P. Moller – Maersk consolidated
2,905
10,327

Earnings Before Interests and Taxes (EBIT)

USD million 2023 Q2 2022 Q2
Ocean
1,205
8,526
Logistics & Services
115
234
Terminals
269
316
Towage & Maritime Services
71
16
Unallocated activities, eliminations, etc.
-53
-104
A.P. Moller – Maersk consolidated
1,607
8,988

Source: Container News

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CMA CGM enhances FAL 1 service

French ocean carrier CMA CGM has announced the extension of its FAL 1 service into Poland.

The Marseille-based company said the first sailing Westbound from Asia will be on 10 August ex Pusan with CMA CGM Jacques Saade with an estimated time of arrival (ETA) at Gdansk on 5 October.

The updated FAL 1 service rotation will be Pusan (South Korea) – Ningbo (China) – Shanghai (China) – Yantian (China) – Singapore (Asia) – Algeciras (1/2) – Tanger Med (1/2) – Dunkirk (France) – Le havre (France) – Hamburg (Germany) – Gdansk (Poland) – Rotterdam (Netherlands) – Algeciras (Spain) – Port Klang (Malaysia) – Pusan

CMA CGM will now offer two complementary direct services FAL 1 and FAL 5 from Asia to Gdansk. FAL 1 will offer a direct service ex South Korea to Poland, enabling to offer more space for project cargo and also connection into the Baltic via Gdansk. Additionally, LNG vessels will be deployed on FAL 1 service.

“This CMA CGM product is an additional opportunity for our customers to support our Polish local market development but also inland opportunities to Ukraine – Czech Republic – Slovakia – Hungary,” noted the company in a statement.

Source: Container News

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ONE avoids making full-year forecasts as market becomes uncertain

Ocean Network Express (ONE) said on 1 August that the market remains uncertain after its net profit for the three months ended 30 June plunged 91% from the year-ago period to US$513 million.

As such, ONE has refrained from making predictions about its financial performance for the current financial year, which ends on 31 March 2024.

ONE said, “The containership market is in the midst of major changes, such as, the aftermath of global supply chain disruption, changes in consumer behaviour and shifts in trade patterns due to increasing international tensions. ONE is making progress in adapting to these major changes, but further shifts in the market are expected as transport demand and trade patterns continue to alter, creating an uncertain outlook which is difficult to predict.”

Vessel utilisation had declined noticeably on ONE’s Transpacific lanes, coming in at 82% in the three months ended 30 June, compared to 100% in the year-ago quarter.

ONE’s vessel utilisation for Asia-Europe (west-bound) was relatively constant at 94%, but declined to 54% in the opposite direction, from 58% in the year-ago period.

ONE acknowledged that the market had changed since the Covid-19-fuelled boom between mid-2020 and mid-2022.

The pan-Japanese liner operator commented, “Cargo movements from Asia to North America in April-June fell by 18% year-on-year due to a lack of progress in clearing inventories resulting from stagnant consumption caused by inflation and high interest rates. Cargo movements from Asia to Europe in April-May was 9.1% higher than in the same period last year due to an increase in shipments to the Mediterranean Sea, particularly construction materials to Turkey. Shipments to Northern Europe remained at the same level as the same period last year due to stagnant consumption caused by high interest rates.

“As port congestion subsided, vessel utilisation recovered, and substantial supply normalised, but cargo demand has not recovered, which is a factor in the softening of supply and demand. The US West Coast labour negotiations reached a tentative agreement in mid-June. Meanwhile, in Canada, the labour-management negotiations had some impact on vessel operations and inland transport.”

ONE has reacted to the situation by blanking sailings and widening port coverage to enhance revenue. Ships are also slow steaming to reduce fuel consumption.

Larger ships are also deployed to East-West trades ahead of schedule, while ONE has tried to attract more volumes of special cargoes.

Source: Container News

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MSC tops schedule reliability rankings in June

MSC was the most reliable top-14 carrier in June 2023, with 70.6% schedule reliability, followed by Maersk with 69.9%, according to a recent analysis of Sea-Intelligence.

MSC was the only carrier with schedule reliability of more than 70%, while the other six carriers (including Maersk) had schedule reliability ranging from 60% to 70%. Six of the remaining seven carriers had schedule reliability of 50%-60%, with HMM (48.3%) being the only one with less than 50%.

In addition, MSC was the only top-14 carrier to have an M/M gain in June 2023, although a modest 0.3% point increase, with two of the remaining 13 carriers experiencing double-digit M/M reductions. On a year-on-year basis, however, all 14 carriers improved by double digits, with Wan Hai improving by the most, 35.2% points.

Additionally, the global schedule reliability, which has been increasing throughout the year, marked its first M/M decrease of 2.5 percentage points falling to 64.3% in June. However, schedule reliability is up 24.4 percentage points year-on-year.

In contrast, the average delay for late vessel arrivals improved slightly by 0.1 days reaching 4.36 days. In the last three months (including June), the average delay for late vessel arrivals has been within 0.03 days, while on a Y/Y level, the average delay figure was 2.01 days lower.

Source: Container News

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Vietnamese rice prices increase after India’s export ban

Rice prices in Vietnam’s Mekong Delta region last week reached a record high in the last 10 years after India banned the export of non-basmati white rice.

Rice prices in Vietnam’s Mekong Delta region last week reached a record high in the last 10 years after India banned the export of non-basmati white rice.

The price of Vietnam’s 5% broken rice increased to 550-575 USD per tonne on July 27, the highest since 2011. In the week earlier, it was just 515-525 USD per tonne.

Vietnam’s average rice export price for the first six months of 2023 reached 539 USD per tonne, a 10.2% increase over the same period in the previous year, according to the General Department of Vietnam Customs.

A trader in Ho Chi Minh City said that exporters expect prices of the grain to rise further after India’s move to restrict rice exports.

Meanwhile, Thailand’s 5% broken rice prices also increased to 605-610 USD per tonne on July 27, the highest in the last 11 years.

On July 20, India issued a ban on rice export, aiming to ensure adequate domestic availability at reasonable prices. The ban pushed its rice prices to 445-450 USD per tonne – a record high in the last five years and a half.

According to the Vietnam Food Association, rice prices in the domestic market have also increased sharply.

For example, the price of 5% broken rice is 12,500 VND (0.53 USD) per kg, the average price is 12,304 VND per kg, an increase of 754 VND per kg./.

Source: Haiquanonline

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EU trade deal boosts Vietnam exports

The EU – Vietnam Free Trade Agreement (EVFTA) has had positive impacts on Vietnamese businesses since it took effect on August 1, 2020.

As the first FTA between Vietnam and the EU, the EVFTA is likened to an important highway connecting Vietnam with the 27 EU economies. This is also a new-generation and the second-highest-standard FTA that Vietnam has signed, with commitments covering different fields, a strong degree of liberalization and a higher level of commitment than most of the FTAs that Vietnam has joined.

A 2022 survey by the Vietnam Chamber of Commerce and Industry’s (VCCI) Center for WTO and Integration showed that Vietnam earned an export revenue of US$83.4 billion from August 2020 to July 2022, an average of US$41.7 billion per year, 24 percent higher than the 2016-2019 period’s. 14.8 percent of Vietnam’s exports benefited from the EVFTA in 2020, with the rate reaching 20.2 and 24.5 percent in 2021 and the first half of 2022, respectively.

Regarding enterprises’ awareness of EVFTA, almost 94 percent of the surveyed said they have heard or known about the agreement, the highest percentage among the FTAs in which Vietnam is a signatory. Specifically, of every 10 surveyed businesses, three know quite well and one knows very well about EVFTA commitments related to their operations. This is attributed to the agreement’s efficient promotion by relevant state organizations, including the VCCI, as well as media agencies.

Nearly 41 percent of the surveyed said they had benefited from the EVFTA, mostly the agreement’s export and import tariff incentives. They said the agreement helped increase orders, revenues and profit, as well as cooperation, investment and intellectual property protection opportunities.

Referring to the use of tariff incentives, 17 percent of the surveyed said they enjoyed EVFTA tariff incentives for at least one export shipment, while 16 percent said they had an import shipment subject to tariff preferences. Seventy-three of the surveyed said they knew about the incentives through learning about the agreement’s commitments, while 36 percent of the surveyed said they got information from their partners. Thirty-four percent of the surveyed said their raw material supply and production have met the EVFTA’s rules of origin, while 13 percent had to change and adjust processes and facilities to enjoy the agreement’s incentives.

In particular, 76 percent of the surveyed businesses said they believe that FTAs will have impacts on their operations in the next three years, with 85 percent expecting positive impacts and only one percent predicting negative ones. Most of them expect the agreement will help improve supply, the number of orders, revenues, profits, value chain participation, and cooperation opportunities.

Seventy-six percent of the surveyed businesses said they believe that FTAs will have impacts on their operations in the next three years.

Source: VN Economic News

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CMA CGM exceeds US$12 million in second quarter revenues

French ocean carrier CMA CGM reported revenue of US$12.3 billion and net income of US$1.3 billion in the second quarter of the year. These figures represent huge year-on-year decreases over the previous record year for the container lines when CMA CGM achieved US$19.5 billion in revenue and US$7.6 billion in profit.

Additionally, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) reached US$2.6 billion, translating to a 73% year-on-year decline.

Commenting on the results for the period, Rodolphe Saadé, chairman and CEO of the CMA CGM Group, said, “As expected, our industry continued to normalise in the second quarter and, despite difficult market conditions, our performance remains robust. In recent years, we have significantly strengthened our two strategic pillars: transport and logistics. On that basis, our Group will pursue its transformation, as it continues to expand and to integrate recently acquired subsidiaries, while stepping up investments to decarbonize its activities.”

CMA CGM noted that the aforementioned results are driven mostly by the Group’s shipping business. The Marseille-based company announced that consolidated revenue from shipping operations amounted to US$8.4 billion, down 47.9% from the second quarter of 2022. Moreover, EBITDA totaled US$2.2 billion, 76% lower than in the prior-year period.

The average revenue per TEU amounted to US$1,491, down 10.3% year-on-year, with CMA CGM handling 5.6 million TEUs, almost the same volumes as the previous year.

“Volumes remained buoyant on the North-South lines, but the Transpacific and Asia-Europe lines were hit by the slowdown in household consumption and dealer inventory drawdowns,” noted the company in a statement.

CMA CGM noted that late 2022 trends continued to prevail in the first half, with “deteriorated market conditions in the transport and logistics industry”.

Macroeconomic forecasts for the second half of 2023 anticipate sluggish global growth given the persistent inflationary pressures weighing on consumer spending as well as the measures taken by central banks in response, and geopolitical uncertainties, according to CMA CGM’s announcement.

Source: Container News

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HHLA lowers forecast for current financial year

German port and terminal operator Hamburger Hafen und Logistik AG (HHLA) is adjusting its forecast for the current financial year based on preliminary figures for the first half of 2023.

HHLA now expects container throughput to be at the level of 2022, while the company had previously forecasted a year-on-year moderate increase in box volumes. Additionally, HHLA said that the expected decrease in revenue for the Port Logistics subgroup became “significant” from “slight”.

Overall, a “significant” decrease in revenue is forecast at a Group level from a “moderate” one. Against the background of the changed expectations, the operating result (EBIT) will be within a range between €115 and 135 million (previously: within a range between € 160 and 190 million), said HHLA in its latest forecast.

“The ongoing war in Ukraine, geopolitical tensions, inflation and rising interest rates are weighing on consumer and industrial demand and continuing to slow down the global economic recovery after the pandemic. Several economic research institutes have recently revised their forecasts for the German economy downwards accordingly, most recently also the International Monetary Fund,” commented the operator.

In view of the aforementioned volatile environment, the outlook continues to be subject to considerable uncertainties, pointed out HHLA.

Source: Container News

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Panama Canal maintains competitive draft levels for the next months

The Panama Canal announced it will maintain a draft of 13.41 metres for the next several months, “as long as weather conditions do not vary significantly from current projections”.

Panama Canal noted that consistent with this draft and along with this temporary condition, an average of 32 vessels per day will be allowed to transit.

“As part of a worldwide phenomenon, in the last six months, the Canal has experienced an extended dry season with high levels of evaporation, with a high probability of an El Niño condition before the end of this calendar year,” pointed out the Canal in a statement.

The Canal added it has been implementing procedures to improve water efficiency in its operations, while conducting studies to identify long-term solutions to climate variability.

Source: Container News

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Georgia Ports moves 5.4 million TEUs in FY 2023

Georgia Ports handled a total of 5.4 million TEUs in fiscal year (FY) 2023 (1 July 2022 – 30 June 2023), down 6.7% or 387,000 TEUs compared to the previous record FY.

According to recent data, the port of Savannah achieved an 11.2% market share in container trade among US ports on the East, West and Gulf coasts through April, its highest ever.

Additionally, the port handled record Roll-on/Roll-off volumes in FY 2023 with more than 723,500 units, translating to an increase of 18% or nearly 109,000 units over the previous year.

More specifically, Ro/Ro imports were up by 99,000 units year-over-year, or 24%, while exports increased by 11,500 units, or more than 7%.

Furthermore, the record trade at the Appalachian Regional Port was another highlight in FY2023. The inland terminal handled its highest volumes ever, at 33,700 rail lifts, an increase of more than 18% or 5,200 containers.

To prepare for future demand, Georgia Ports Authority (GPA) is investing US$1.9 billion in current infrastructure projects. Enhancements include renovations to Berth 1 at Garden City Terminal, which aims to increase berth capacity by 25%.

Additionally, an improved Berth 1 reopened to vessel service on 20 July, providing faster turn times for ocean carriers.

Finally, according to the port authority, a new transload facility delivers greater speed and flexibility for customers in cargo handling, while the Garden City West development adds 404,686 m² of long-term storage available at a lower cost than in the regular container yard.

Source: Container News

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