Category Archives: Shipping Industry Forecast 2014

maersk line container shipping

Shipping Industry Rebounding, Signals Strong Future Ahead

According to the largest container shipping company in the world (by revenue), the worldwide shipping industry finally looks to be in a great place. Analysts agree that the entire shipping sector is coming back strongly from a tough economic downturn, and is shrugging off new issues related to Russian sanctions.

Moller-Maersk, the Danish shipping and oil group, reported second quarter net profits that surpassed its previous forecasts. The shipping giant said that this strong growth was attributed to a growing demand for container transportation, which in turn increased profits and encouraged them to raise the company’s forecast for the year. According to recent reports, container shipping volume increased by 6.6 perfect in the quarter (year over year), compared to the same quarter in 2013.

It is a bellwether for global trade to a large extent, simply by virtue of its status as the world’s largest container shipping line.- Analyst for Macquarie Securities

Moller-Maersk has announced second-quarter net profits of $2.25 billion, which beat the set expectations of $2.21 for the financial period. The shipping unit of the firm, better known as Maersk Line, also performed better than expected. This unexpected performance prompted the company to increase its 2014 underlying profit projection by half of a billion dollars, rising to $4.5 billion from the previously announced figure of $ 4.0 billion.

Group CEO Nils Smedegaard Andersen has gone on record to state that the results were very satisfactory for the first half of 2014 and are in line with the company’s prediction that shipping revenues this would far surpass those from the dismal performance in 2013.

This quarter we have benefited from a pretty good pickup from the Asia to Europe trade.- Maersk CEO

According to officials, the company has been better able to manage the shipping line’s container capacity, thereby allowing Maersk Line to outperform the market and all of its competitors.

Tensions are high around Russia, who is still reeling from the repercussions of sanctions imposed by Western countries following the issues with Crimea back in March 2014. Analysts expect that this political and economic turmoil could possibly affect the company’s revenues. Nevertheless, Moller-Maersk announced that it will buy back $1 billion in shares in the coming 12 months.

maersk mc-kinney moller container ship

Shipping Industry Emerges From The Slump Stronger Than Before

In the mind of most analysts, the shipping industry has already hit rock-bottom and is well on its way to a full recovery. After suffering through years of vessel over-capacity and falling container lease rates, global container shipping companies are finally in a position to better utilize their larger vessels, like the Maersk Triple E fleet, and make a strong effort to return cargo rates to pre-2008 levels. In fact, just recently it was suggested that container lease rates will rise incrementally, beginning in March of 2014. Some say that within a year it can be expected that the cost of leasing a shipping container will be nearly what it was before the financial crisis struck the world.

the demand for shipping containers is risingAside from an increase in revenues resulting from a rise in lease rates, the demand for shipping containers is expected to continue to grow continuously, in an effort to meet the world’s economic growth figures. In some regions, Maersk expects as much as 5 percent growth in the need for shipping containers internationally. This spells big opportunities for the investment community. Especially for investors who are investing in maritime assets, like shipping container investments.

To addressing the industry’s nagging issues of over-capacity, many of the world’s leading container shipping lines have taken an rather unconventional approach. They have merged with their competition, to create formidable shipping alliances. The most notable being the G6, CKYH and the newly proposed P3 container shipping alliance. Each of these partnerships allows its members to share shipping resources on major trade routes, thereby improving over-all operating efficiency and increasing profits.

It has become more apparent that over the last several years, during the worst of the economic downturn, shipping industry leaders were building opportunities and exploring options, which have helped them emerge from the GFC stronger than when they went in. Collectively they have become more efficient and more profitable. This sort of positive performance is inspiring investors to learn more about Pacific Tycoon’s offer to invest in the global shipping industry and discover how to profit from economic growth around the world.