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MSC and Maersk continue to send ships for break-up

The world’s two largest liner operators have continued to scrap aged ships as the freight market has normalised to pre-Covid-19 levels.

Shipbrokers said that this month, MSC has sold the 1993-built 3,720 TEU MSC Erminia and 1999-built 1,837 TEU MSC Lana II for US$505/ldt and US$520/ldt respectively. As with the 1990-built 4,814 TEU MSC Federica, which was sold for US$515/ldt, the ships were sold into India for recycling. Year to date, MSC has scrapped seven ships.

Additionally, Maersk Line sold the 1998-built 2,890 TEU Maersk Patras for an undisclosed price, on an “as is” basis, with the buyer arranging to collect the vessel in Jebel Ali port. So far this year, the Danish carrier has scrapped three vessels.

Greek broker Intermodal stated that in India, local steel prices rose slightly last week, but this is not expected to be sustained as the monsoon season continues and steel mills are experiencing disruptions.

“Local breakers have seen vessels for scrap ending up in other destinations as offer prices in India remain high,” observed Intermodal.

Cash buyer Wirana Shipping Corporation said that traders are avoiding restocking steel for post-monsoon orders.

Wirana said, “In view of lack of finished steel demand, it would need to be seen whether the increase in billet prices and local steel plate prices seen this week are sustainable for secondary steel mills and whether they continue at same levels in coming weeks.”

Besides the vessels sold by MSC and Maersk, intra-Asia carrier Straits Orient Lines has continued to trim its fleet, selling the 1997-built 1,730 TEU SOL Straits into Bangladesh for US$592/ldt. The firm price was due to the ship having 250 tonnes of leftover bunkers, although Bangladeshi recyclers have not been able to buy many vessels due to the scarcity of letters of credit issued by banks there. In January, Straits Orient Lines sold 1995-built 1,728 TEU SOL Delta for US$587/ldt for recycling in India.

Source: Container News

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Carriers attempt PSS for India-US cargo after modest GRI success

Container lines appear to have regained some bargaining power to lift freight rates on the India-US trade lane after managing partial recovery from recent general rate increase (GRI) attempts.

Mediterranean Shipping Co. (MSC) and CMA CGM have lined up a new round of peak season surcharges (PSS) for India-US shipments.

MSC will apply a PSS of US$500 per container for all cargo from India to the US and San Juan (Puerto Rico), from 15 August. The Geneva-based carrier said the surcharge is necessary to “maintain a high level of reliability and efficiency of its services to the needs of customers.”

French liner CMA CGM has announced a PSS levy of US$350 per 20-foot/40-foot box and US$550 per 45-foot hi-cube box for Indian container loads to the US East and Gulf coasts, from 1 September.

Other major carriers, including Maersk and Hapag-Lloyd, also plan to hike rates on the same trade through general rate increase (GRI) activity.

For shipments from India to the US and Canada, Maersk will attempt a GRI of US$350 per 20-foot, US$500 per 40-foot, US$750 per 45-foot hi-cube and US$1,000 per 40-foot reefer box, also starting 1 September.

Hapag-Lloyd has instituted a hike of US$200 per container for all types of Indian cargo to the US East Coast.

“This GRI/general rate adjustment is applicable to all containers gated in full from 1 September and is valid until further notice,” stated the carrier in a customer advisory.

However, glaringly, carriers have adopted a pragmatic approach – seeking more moderate increases, instead of hefty amounts that typically hit the market in the lead up to so-called peak shipping season.

Indian exports have seen sharp declines in recent months, a trend industry observers believe is unlikely to turn around any time soon amid weakening demand conditions across major economies. Indian goods exports by value slumped 22% year-over-year in June, according to the latest government data.

Meanwhile, carriers — offering regular calls out of India’s west coast — continue to deal with considerable cargo flow challenges at Mundra Port, India’s largest box gateway, following recent cyclone-induced disruptions.

Customs house brokers at Mundra have expressed serious concerns over empty container pickups and drops from storage yards, noting the bottlenecks are straining cargo flows for exporters/importers.

“We suggest shipping lines set up new empty yards inside the port area with all required equipment and good infrastructure to enable us to locate empty containers inside the port area and it will also reduce the cost of transportation and save valuable resources,” noted the Mundra Customs Brokers’ Association in a communique to all stakeholders.

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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 could displace Maersk as second-largest container line

French carrier CMA CGM is poised to overtake Maersk Line as the world’s second-largest liner operator, with its aggressive newbuilding orders and second-hand vessel purchases, according to Alphaliner’s report.

CMA CGM’s current fleet comprises 625 ships of 3.49 million TEUs, while it has 122 ships of 1.24 million TEUs on order.

In comparison, Maersk Line’s fleet, which stands at 4.14 million TEUs, has just 32 ships of 400,000 TEUs under construction. If the Danish operator, which was displaced by Mediterranean Shipping Company (MSC) at the top of the liner rankings in 2022, does not acquire more vessels, by 2026, it will have just 4.54 million TEUs when all its new ships are ready, while CMA CGM would surpass Maersk Line with 4.73 million TEUs.

Alphaliner remarked, “As per mid-July, the French Line’s orderbook stands at 35.5% of the carrier’s existing fleet capacity. Unlike MSC, which accelerated its fleet expansion through newbuilding and by means of an absolutely massive second-hand buying programme, CMA CGM has taken a somewhat different approach and it also procured numerous mid-sized vessels through a tidal wave of charters. This includes both ships from the spot market and new tonnage that will join the carrier upon delivery.”

CMA CGM’s operated fleet first crossed the 1 million TEUs threshold in July 2009 and it took the carrier five years to pass the 2 million TEU milestone in July 2016.

At the time, CMA CGM’s takeover of Neptune Orient Lines (APL) propelled the group’s liner fleet from 1.79 million TEUs to 2.34 million TEUs.

Like MSC, CMA CGM began active purchases of pre-owned ships when freight rates began ascending to historical highs in 2020. The French line has purchased 427,000 TEUs of ships of all sizes. CMA CGM has also committed to 170 vessel charters since the start of 2023 and has been the most aggressive charterer among liner operators.

In a weakening market, CMA CGM might very well let go of older, less efficient ships in 2024, when charters expire. The company is scheduled to receive about 500,000 TEUs of newbuildings from now until the end of 2024.

In 2025, fleet additions will be relatively low at just 200,000 TEUs, before doubling to 400,000 TEUs in 2026. Assuming that half of CMA CGM’s orderbook is for growth and half of it will be for fleet replacement, the carrier’s fleet would stabilise at 4.2 million TEUs in late 2026.

The same assumptions would still put Maersk slightly ahead at 4.34 million TEUs, but the Danish line has repeatedly stated that it does not plan to grow its fleet beyond its current 4.14 million TEUs. Maersk Line has emphasised that its newbuildings aim to replace conventionally-fuelled tonnage with more modern, eco-friendly vessels powered by green methanol.

Source: Container News

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Maersk injects additional vessels into Asia – Europe services

Maersk has announced changes to its Asia – Europe network aiming to improve the reliability of its services and enhance their fuel efficiency.

As of week 23, Maersk has decided to inject one vessel into each of the AE5, AE10, AE7, AE55, AE11, AE12, AE15 services and two vessels into the AE6 service.

“The added vessels will allow us to reduce speeds providing needed buffer to absorb schedule challenges, improving reliability, and decreasing the risk of void sailings,” said Maersk in a statement. The speed reductions are also expected to reduce emissions significantly, according to the ocean carrier.

The aforementioned changes announced by the Danish shipping company are anticipated to have an impact on average transit times. Maersk noted that the average transit time from Asia to North Europe will be increased by three days, from Asia to the Mediterranean by two days, from North Europe to Asia by three days and from the Mediterranean to Asia by three days.

Source: Container News

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Maersk adds new weekly rail service in India

A.P. Moller – Maersk has announced another weekly, dedicated rail service, the ‘Pratigya Express’, from Sonipat Inland Container Depot (ICD) in National Capital Region (NCR) to APM Terminals Pipavav Port on the western coast of India in Gujarat.

Maersk’s new ‘Pratigya Express’ service on the Western Dedicated Freight Corridor (DFC) will move 90 TEUs every week.

“The NCR is abundant with retail and rice exporters who need a regular connection from their manufacturing facilities to the consumers in the western market,” commented major Jyoti Joshi Mitter, head of rail at Maersk India.

He added, “Through our dialogues with our customers, we realised that they faced two challenges – either they don’t have a fixed schedule for departure from Sonipat ICD, and once they get it, they do not necessarily make it to the right vessel connection at the port.”

According to Maersk, the ‘Pratigya Express’ will move cargo from Sonipat ICD to APM Terminals Pipavav Port with a transit time of two and half days.

Also, from there, the cargo will have the option to connect on services such as the Shaheen Express, which will be launched in the coming days, or the MECL. Both of these services will then be able to take the cargo to the Middle Eastern or European markets.

Source: Container News

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Maersk announces new service to connect India–UAE–Saudi Arabia corridor

A.P. Moller – Maersk has announced the launch of a new ocean shipping service, ‘Shaheen Express’, which started the previous week.

The new service will rotate between Mundra, Pipavav, Jebel Ali, Dammam, and Jebel Ali and back to Mundra, connecting India, United Arab Emirates (UAE) and Saudi Arabia.

With the new service, Maersk aims to address the rising demand in the trade between the Indian and the Gulf markets. The ‘Shaheen Express’ will include two vessels with a nominal capacity of 1,700 TEUs per week.

India-UAE Comprehensive Economic Partnership Agreement (CEPA) entered into force in May 2022, which is steadily boosting the volumes of trade between the two countries.

The main commodities moving between these two countries that will benefit from the increased capacity include FMCG (fast moving consumer goods) such as electronics, perishables such as foodstuff, retail goods including textile and apparel, and chemicals.

“The markets have started stabilising, and the ocean networks are normalising after over two years of disruptions caused by the Covid-19 pandemic. During this time, not only did we strive hard to ensure we addressed all our customers’ challenges, but we also got a chance to look ahead and understand what their requirements would be in the future,” commented Bhavan Vempati, head of regional ocean management, Maersk West & Central Asia.

Source: Container News

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Maersk opens specialised warehouse for electric car batteries in Europe

A.P. Moller – Maersk has established a new warehouse specialised in handling batteries for electric cars in the northern part of the Czech Republic.

The Danish company aims to expand its logistics network in the automotive industry and original equipment manufacturers (OEMs) across Central Europe.

Located in Teplice, the new 14,000m² facility is within a short distance of a range of car makers and suppliers in the Czech Republic as well as Eastern and Southern Germany.

Maersk said the batteries can be efficiently delivered by train from the major European ports in Hamburg (Germany), Bremerhaven (Germany), Rotterdam (the Netherlands), Koper (Slovenia), or Rijeka (Croatia). Additionally, thanks to the warehouse’s good connection to the Czech and German motorway networks, the batteries can be distributed from Teplice to the surrounding car production sites within a few hours, according to Maersk.

“We are an experienced and trusted partner in transportation and logistics for automotive customers. Our processes are widely audited and approved by car makers and OEMs. We are thrilled that we are taking the next step now with this special warehouse, offering dedicated services for electric car batteries right in the heart of the Czech and German car maker clusters,” comented Leah Offutt, Maersk Central South Europe managing director.

The warehouse is equipped with thermal monitoring cameras and in-rack sprinklers, while the space will be divided into four independent, fire-resistant compartments.

Furthermore, for repacking, the services offered in the special warehouse include in-depth quality controls and charging of the batteries as well as other value-adding services along automotive supply chains, noted Maersk.

Meanwhile, Maersk is also building a new deep-water terminal in Rijeka, which is scheduled to be inaugurated in 2025. It is expected to increase handling capacity in the Eastern Adriatic and significantly reduce the transit times and thus also CO2 emissions of transports from Asia to Europe and especially to Croatia, the Czech Republic and neighbouring countries.

Two further warehouses for dry cargo were recently opened in Kladno, close to Prague, with 10,000 m² space and Zagreb, the capital of Croatia, with 4,100 m² space. A third 11,700 m² warehouse will be inaugurated in spring 2023 in Rijeka.

Source: Container News

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MSC and Maersk accused of abusing container dominance in Brazil

The Brazilian Association of Port Terminals (ABTP) has filled a legal request at the Administrative Economic Defense Council (CADE) of Brazil to investigate the impact of the two largest container lines in the world, MSC and Maersk, on the country’s port market.

ABTP accuses the two container shipping giants of abusing their domination in the box shipping sector in Brazil to give advantages to their own terminals, raising costs and reducing options for the flow of cargo in the country.

ABTP has noted that the two members of the 2M Alliance are responsible for 79% of containers (53% directly and another 26% through commercial agreements) transported along the Brazilian coast. According to them, the control of the flow of cargo is done in such a way that the seven port terminals owned by the two companies would be favored to the detriment of others, even in cases in which other ports are closer to the origin/destination of the cargo.

The terminals that are controlled by MSC and Maersk are three in Santa Catarina and one in São Paulo, Rio de Janeiro, Espírito Santo, and Ceará each and are currently handling approximately 50% of the containerised cargo movement in Brazil.

“The situation should still get worse because the two companies must reach the eighth container terminal, at Estaleiro Atlântico Sul (in Pernambuco),” pointed out Jesualdo Conceição Silva, president of ABTP.

There are 19 other terminals in the country which are not owned by MSC and Maersk and there is a risk of a “generalised crash” if no action will be taken, according to ABTP’s president.

Source: Container News

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Maersk stretches cargo airline wings with inaugural US-Korea flight

A.P. Moller – Maersk announced the inaugural flight of Maersk Air Cargo´s new air freight service with scheduled flights between Greenville-Spartanburg, South Carolina (GSP) and Incheon, Korea (ICN).

The scheduled transpacific operation will commence on 31 October with two weekly flights introducing the first of three newly built Boeing 767-300 freighters that have recently been purchased by Maersk Air Cargo.

All US-Korea flights will be operated by Miami-headquartered cargo airline Amerijet International.

“Back in April, we announced the launch of Maersk Air Cargo as our integrated in-house air cargo carrier. With the introduction of this new service between the US and Korea, we have taken the next step in securing logistics solutions for our customers with our own aircrafts. Next to the new scheduled transpacific flights, we also operate own controlled capacity from Europe into the US, Mexico, South Africa, and Singapore,” commented Michel Pozas Lucic, global head of Air & LCL in A.P. Moller – Maersk.

The scheduled flight of Maersk Air Cargo also marks the first scheduled air cargo operation between the state of South Carolina and Asia.

Meanwhile, the Danish company recently opened a new Chicago Air Freight Gateway facility aiming to add more supply chain integration opportunities for customers using Chicago O’Hare International and Rockford International.

Source: Container News

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