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It’s Happening Again: Maersk Halts Asia-Europe Loop Amid Global Slowdown

It’s Happening Again: Maersk Halts Asia-Europe Loop Amid Global Slowdown  

Growth in the world continues to collapse into late summer, so much so that Maersk and Mediterranean Shipping Company (MSC) had to “temporarily suspend” their AE2/Swan Asia to North Europe loop until mid-November, removing 20,000 twenty-foot equivalent unit (TEU) a week from trade, reported The Loadstar.

Collapsing demand and plunging shipping container rates have led to pain for carriers who sail their vessels along the route. This is the second time Maersk and MSC have suspended the circuit, and the last time this happened was last fall.

Maersk and MSC said it’s working hard to “balance its network to match reduced market demand for the upcoming [Chinese factory shutdown] Golden Week.”

Maersk and MSC said the AE2/Swan suspension would “help us to match capacity with the expected weaker demand for shipping services” from Asia to Europe.

Maersk and MSC said the service would resume “in line with demand pickup,” suggesting the suspension could be extended into 1H20 as global trade isn’t expected to pick up for the next six to eight months. 

Maersk and MSC adopted a similar strategy last year, suspending AE2/Swan Asia to North Europe loop from September to December, this was right around the time when stock markets across the world crashed from October to December, on fears the world economy was slowing. It just so happens that the global synchronized slowdown is much worse this year, likely the world has entered a manufacturing/trade recession in late summer 2019.

The suspension of AE2/Swan loop will see 12 17,800-20,500 TEU vessels idled for the next several months. 

The last time the AE2/Swan loop was halted, it was during the period when world stocks collapsed last fall.

Freightos freight data for China to Europe 40 ft shipping containers shows muted price recovery over the last several years.

 …click on the above link to read the rest of the article…

The Upside Of ‘Global Warming’

An interview from the Russian Ministry for Maritime and River Transport published on website PortNews says that Arctic ports along the Northern Sea Route are experiencing a surge in cargo. Up to August 24th of this year, 9.95 million tons of goods went through ports in the region, an 81 percent increase on last year’s 5.5 million.

As Statista’s Niall McCarthy notes, even though the passage is only feasible for three months of the year, global warming is making it increasingly viable for major shipping companies.

This year, temperatures in the Arctic Circle have been unusually warm, topping 30C on several occasions.

That resulted in Maersk confirming that it was sending a ship with a 3,600 container capacity, the Venta Mersk, over the top of Russia on a test run. The decision has been welcomed in Russia where it’s hoped the Arctic route will compete with the southern route through the Suez Canal and Straits of Malacca. The Northern Sea Route runs from Murmansk near Russia’s border with Norway all the way to the Bering Strait in Alaska with all transiting ships requiring a permit from the Russian authorities.

Even though travel-time can be reduced by two weeks compared to the southern route, costs are generally higher because vessels have to be accompanied by a nuclear-powered icebreaker.

The Venta Maersk left Vladivostock before docking in Pusan, South Korea.

It embarked on its long journeythrough the Arctic and its expected to pass through the Bering Strait at the start of September before finishing the trip in St. Petersburg at the end of the month. The following infographic shows how a general container-ship would travel between Europe and East Asia, using Hamburg and Shanghai as example ports.

…click on the above link to read the rest of the article…

“Worse than 2008”: World’s Largest Container Carrier on the Slowdown in Global Trade

“Worse than 2008”: World’s Largest Container Carrier on the Slowdown in Global Trade

“Massive Deterioration,” the CEO called the phenomenon.

“Bellwether for global trade,” that’s how the Financial Times described Maersk Lines, the world’s largest container shipping company. It’s owned by Danish conglomerate AP Møller-Maersk, which also owns, among other divisions, Maersk Oil. The conglomerate reported fourth quarter earnings today. And they were a doozie.

Maersk B shares plunged over 9% to 7,395 Danish kroner, before bouncing off and closing at 7,875, down 3.6% for the day and down a breath-taking 52% from their peak on March 30 last year.

Global economic slowdown — or worse? That’s the question. This is what CEO Nils Andersen told the Financial Times in an interview after the earnings release:

“It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse, but we are better prepared.”

“Better prepared,” that is, than the Group had been in 2008.

He called global trade conditions “abnormal.” Containerized imports to Europe, Brazil, Russia, and West Africa all fell – in Europe and Brazil due to various economic reasons; in oil exporters Russia and West Africa due to the collapse in the price of oil.

The earnings report reflected it: in terms of seaborne container freight, the year had started out with some room for optimism and hopes for growth, but in the second half, and particularly in the fourth quarter, those hopes got hammered by an increasingly gloomy reality.

“Massive deterioration,” Andersen called this phenomenon in the interview.

“Acceptable full-year result in challenging times,” is what the Group called the phenomenon in its earnings report.

…click on the above link to read the rest of the article…

 

“It’s Worse Than 2008”: CEO Of World’s Largest Shipping Company Delivers Dire Assessment Of Global Economy

“It’s Worse Than 2008”: CEO Of World’s Largest Shipping Company Delivers Dire Assessment Of Global Economy

Earlier today, we highlighted the rather abysmal results reported by Maersk, the world’s largest shipping company.

To the extent the conglomerate is a bellwether for global growth and trade, things are looking pretty grim. Maersk Line – the company’s golden goose and the world’s largest container operator – racked up $182 million in red ink last quarter and the outlook for 2016 isn’t pretty either. The company now sees demand for seaborne container transportation rising a meager 1-3% for the year.

“The demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels,” the company said, in its annual report.

Just how bad have things gotten amid the global deflationary supply glut you ask?

Worse than 2008 according to CEO Nils Andersen who last November warned that “the world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.” Here’s what Andersen told FT:

“It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.”
As FT goes on to note, “capacity in the container shipping industry increased 8 per cent in 2015” despite the fact that Maersk only sees global trade growing at between 1% and 3% in 2016.

Imports to Brazil, Europe, Russia, and Africa are all falling, Andersen warned. The company’s business, Andersen says, is suffering from a “massive deterioration.” That, you can bet, will likely lead to a “massive deterioration” in Maersk’s shares, which took a substantial hit on Wednesday in the wake of the quarterly and annual results.

…click on the above link to read the rest of the article…

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