This is how Maersk can use an unprofitable Singapore carrier

Maersk Line could use the acquisition of Singapore-based carrier APL to renew its fleet of medium size ships and strengthen its position on the Pacific, says Lars Jensen from SeaIntelligence Consulting. But the price has to be low enough.

When Singapore-based carrier Neptune Orient Lines (NOL) confirmed Tuesday that both Maersk Line and French CMA CGM had an interest in buying NOL's container shipping carrier APL, it caused a stir in the container industry and among shipping analysts. Since 2009, APL has been a chronically ailing company which has seen a declining market share in the carrier's most important market in the Pacific Ocean between Asia and the US.

Neptune Orient Lines (NOL) has divested assets in recent years, including its Singapore headquarters for USD 380 million and the logistics segment APL Logistics, while implementing austerity plans to raise liquidity. None of these efforts have transformed APL into a profitable company, and with the prospect of overcapacity, tough price competition and weaker demand, the chances of selling stock-listed APL look increasingly slim if the shares according to Alphaliner are currently trading at a discount of 24 percent compared to book value.

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