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  • DATVF.CHIATL
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  • DATVF.DALLAX
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  • DATVF.LAXDAL
    1.459
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  • DATVF.SEALAX
    0.984
    0.022
    2.3%
  • DATVF.PHLCHI
    1.110
    0.019
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  • DATVF.LAXSEA
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  • DATVF.VEU
    1.634
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  • DATVF.VNU
    1.466
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  • DATVF.VSU
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  • DATVF.VWU
    1.569
    0.015
    1%
  • ITVI.USA
    9,394.010
    -295.340
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  • OTRI.USA
    7.540
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    -1.4%
  • OTVI.USA
    9,375.560
    -302.450
    -3.1%
  • TLT.USA
    2.730
    0.000
    0%
  • WAIT.USA
    156.000
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  • DATVF.ATLPHL
    1.751
    -0.063
    -3.5%
  • DATVF.CHIATL
    2.041
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  • DATVF.DALLAX
    0.928
    0.007
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  • DATVF.LAXDAL
    1.459
    -0.043
    -2.9%
  • DATVF.SEALAX
    0.984
    0.022
    2.3%
  • DATVF.PHLCHI
    1.110
    0.019
    1.7%
  • DATVF.LAXSEA
    2.155
    0.009
    0.4%
  • DATVF.VEU
    1.634
    -0.013
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  • DATVF.VNU
    1.466
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    -0.3%
  • DATVF.VSU
    1.194
    -0.017
    -1.4%
  • DATVF.VWU
    1.569
    0.015
    1%
  • ITVI.USA
    9,394.010
    -295.340
    -3%
  • OTRI.USA
    7.540
    -0.110
    -1.4%
  • OTVI.USA
    9,375.560
    -302.450
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  • TLT.USA
    2.730
    0.000
    0%
  • WAIT.USA
    156.000
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American Shipper

Maersk Line down in 3Q, but terminal, oil divisions help group

   Maersk Line, the A.P. Moller Maersk Group’s liner carrier division and the world’s biggest container line, sustained $257 million of operating losses in the third quarter, the parent company said in a financial earnings call Wednesday.
   That cut significantly into the line’s profits for the year, which stood at $145 million through three quarters. The line expects to post a loss for 2011 after making more than $400 million in the first half.
   But the group’s other businesses more than offset losses on the container shipping side, with APM Terminals, the company’s terminal operating arm, netting $214 million in the third quarter and $573 million through three quarters.
   Meanwhile, Maersk’s oil and gas division has ridden spiking oil prices this year to a $6.1 billion operating profit through three quarters, a 41 percent increase from 2010. Oil revenue has risen 30 percent, to $9.6 billion.
   Maersk Group Chief Executive Nils Andersen called the results a “mixed bag” but said the company’s core businesses are doing well aside from Maersk Line and its liner subsidiaries, which have been dragged down by poor rates due to overcapacity in the market.
   “Revenue has continued to grow,”Andersen said. “It’s a tough industry, but it’s still a growth market. We believe for a group of our size and strength that there will be opportunities as the capacity crisis unfolds further.”
   As a group, Maersk made $2.1 billion in operating profits in the third quarter, down 29 percent from 2010, on revenue that grew 9 percent, to $15.3 billion. The company is projecting a net profit of $3.1 billion to $3.5 billion for the year, despite the expected loss from the container division.
   Maersk Line’s volume grew 16 percent in the third quarter, to 4.2 million TEUs, and has grown 9 percent for the year, to 11.8 million TEUs. But rates have deteriorated throughout the year, leading the line to incur an operating loss of $124 per FEU it carried in the third quarter.
   The 16 percent third quarter volume growth was highlighted by 27 percent growth on the headhaul Asia-Europe lane despite Maersk’s average rates on that trade plummeting 26 percent. On the transpacific, Maersk’s two-way volume rose 2 percent, as its average rates fell 16 percent.
   Andersen blamed overcapacity on the key Asia-Europe trade, where roughly 40 percent of the line’s capacity is deployed, calling it a “homemade problem” within the industry.
   “It’s hard to say how much capacity needs to be removed,” he said. “It’s hard to give an exact figure, but it’s probably less than we think. In our business, it takes very little overcapacity to see rate reductions. I think we’re talking about a small number of vessels that need to be laid up. But I expect overcapacity to prevail into 2012.”
   Andersen also rejected the notion that Maersk is trying to grab market share, considering its increase in volume in the third quarter as profitability ebbed away.
   “I don’t feel we’re leading a price war in any way,” he said. “On the other hand, we are standing firm to protect our position, particularly on Asia-Europe.”
   He noted that Maersk has not been the one to introduce larger vessels on the trade this year, saying “we’re not the drivers of this development on that particular trade.” He said Maersk won’t withdraw capacity that would affect its ability to deliver on its recently started Daily Maersk product, which provides guaranteed transit times and daily cut-offs at origin on the Asia-Europe headhaul.
   “We have no intention of limiting our capacity on the trade,” he said. “That’s definitely a no-go.”
   Rates are now at around 2009 levels, excluding the impact of bunker prices, Andersen said, with Maersk’s third quarter average freight rate dropping 12 percent, to $2,860 per FEU, and the year-to-date average rate dropping 6 percent, to $2,886 per FEU.
   Maersk Line has also been hit by an increase in operating costs outside of bunker this year. Unit costs rose 2 percent in the third quarter and 5 percent year-to-date.
   The main reasons for the cost increases, he said, have been an increase in time charter costs, compared to extremely low charter costs in 2010, and increasing costs at terminals in emerging markets like Africa and Latin America where Maersk is increasing service. He added that terminals in general “are better at withstanding price pressures than lines.”
   Those dynamics have in part helped propel APM Terminals to good profitability, a performance that has buoyed the non-oil related businesses within the group. Though year-to-date operating profits have dropped 27 percent, profits rose 21 percent in the third quarter. Revenue has climbed 9 percent this year, to $3.4 billion, while APM Terminals’ throughput has risen 5 percent this year, but 11 percent in the third quarter (7 percent on like-for-like volume).

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