Despite the increasing uncertainty with regards to the financial hit to industries, Russell Group have modelled the exposure for companies and countries. In the first of these articles, we take a look at the impact on shipping.
This Week in Marine: Maersk predicts a 25% fall in container volume
15 May 2020 | Blog Post
Maersk predicts 25% fall in container volume
Maersk announced a 25% fall in expected container volume this quarter as the coronavirus pandemic continues to disrupt world shipping trade.
Accounting for 17% of all containers moved worldwide according to The Wall Street Journal, the company reported positive earnings for the first quarter of 2020 with a net profit of $197 million, up from last year’s loss of $659 million in the same period according to FactSet.
Furthermore, despite Maersk’s average container freight rates being up by 5.7% from the same period last year, they were expecting a significant rise in so-called “blank sailings”, which numbered 90 in the first quarter and 140 in second quarter (a growing trend we reported on) .
Maersk shipping line, reported a 25% boost in profit from the same period last year, reporting a profit of $1.25 billion.
“Shipping Industry in the Red”
Global container trade as a whole is expected to contract by 7.3% this year as the coronavirus disrupts the industry, according to Alphaliner.
This contraction in trade is leading many experts to worry that the leading carriers may suffer financial losses and end the year in the red. Speaking to WSJ, many analysts said that the disruption could trigger a battle between strong carriers and weaker carriers, with the strong carriers using their significant cash holdings and access to credit markets to outmuscle weaker operators.
France’s CMA CGM SA secures historic state-backed $1.14 billion loan
In a historic move, CMA CGM SA, the fourth-largest container line in the world, received a $1.14 billion loan backed by the French Government to help it weather the financial hit by COVID-19. This was the first time such a move has ever happened.
Such a move comes despite CMA announcing in 2019 that they were raising $2 billion in order to acquire CEVA logistics, the Switzerland-based logistics firm for $1.7 billion last year.
In the fund-raising exercise, CMA raised more than £969 million from selling its stake in 10 port terminals to Terminal Link, its joint-venture with Chinese Merchant Ports Holding Co. Limited (owned by Chinese Government owned-Merchants Group). The joint-venture owns over 13 port terminals worldwide according to analysts.
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