The stars will shine when the Maersk Group presents its result for the first half of 2012 on Tuesday next week. However, the positive figures are a brief respite before decline will seriously affect Maersk and the rest of the container industry. So is the assessment from SeaIntel analyst Lars Jensen.
“I think that we will witness a result with a nice profit next week. The effect of the rate increases from the start of the year is starting to kick in”, says Lars Jensen and he adds:
“However, if we look behind the carpet, the rate increases are not caused by the market getting stronger. The fundamental market terms are very very bad. The good result is caused by a good level of discipline within Maersk and the container industry as a whole which has been able to maintain rate increases but the discipline will not last”.
2013 extremely difficult
Lars Jensen thinks that the high rate discipline will begin to crumble by the end of 2012 with the shipping companies being tempted to lower rates again. Alongside a decrease in the traffic between Asia and Europe, the presumed fall in rates will be reasons as to why Maersk and other carriers will once again be in decline.
“During this summer, we have already seen some departures on routes between Asia and Europe being cancelled. As it has already happened during the peak season in which peak season surcharges are introduced but ships cannot be filled up, we can expect to see a lot more of it”, Lars Jensen says.
On top of this, overcapacity will also play a part. The market is already affected by overcapacity but the overcapacity will increase once Maersk deploys its EEE-class ships.
“Simply put, there is no market for the ships. We have begun a decline and 2013 will be an extremely difficult year. Unless something drastic will happen nothing will improve and the carriers will be forced to lay up some of their ships”, Lars Jensen says.
Disagreements on the future
Last week, RS Platou Markets voiced a very positive assessment of the upcoming results in which the future of Maersk was not included. The future was included in an interview with Clarkson Investment Services who told ShippingWatch on Tuesday that the development in Maersk is turning positive in the long term and thereby, Clarkson is a lot more optimistic than SeaIntel.
"It feels like the turning point will happen in the second quarter, but that will not be certain until we are in the third quarter because that is where we will hopefully experience a peak season particularly on the route to the U.S. Europe is still in recession mode, but we are encouraged by the volumes going from Asia to the US. We are also seeing spot rates that have gone up significantly year on year on both trades,” says Michael Pak, Senior Analyst of Clarkson Capital Markets but he is not entirely positive:
"I think the key question for the rest of the year is how liner companies will readjust their capacity as we move past the peak season in the third quarter. Hopefully, it will set them up for another set of GRI initiatives, because right now the idle capacity is at a very low percentage and I would expect it to increase again in the slow-down period of the fourth quarter. If this doesn't occur then the sustainability of box rates going forward will definitely be at risk,” Michael Pak finished on Tuesday.