On August 21, Maersk Group received heavy news. On the same day, Maersk Group signed an agreement with Total SA. Total SA will acquire Maersk Oil Company (Maersk Oil Company) for a total of US$7.45 billion in the form of combined stock and debt transactions. and Gas).
Prior to this, the actual profit of Maersk Group has achieved a small increase, from 201 million US dollars in the first quarter to 389 million US dollars. However, due to the asset impairment of the group's tankers and terminals, the reported profit in the second quarter was -264 million US dollars.
After experiencing the low freight rate last year, the shipping industry has embarked on the road of bottoming out and recovering this year. With the recovery of world trade and the relatively "rational" capacity adjustment of major shipping companies, the supply and demand of the shipping industry are basically balanced, and freight rates are also showing a recovery trend.
Affected by higher freight rates, Maersk Line turned into a quarter-on-quarter loss in the second quarter.
In the first quarter of this year, Maersk Line lost $80 million due to a $381 million increase in fuel expenses. According to the recently released financial report, the actual profit of shipping in the second quarter was 327 million yuan.
However, on the whole, the freight rate is still only at the "low-middle level" of the historical level and has not been fully released. For the current shipping market, most shipping companies are only "cautiously optimistic", even the number one container liner company is no exception.
During the interview with 21st Century Business Herald and other media reporters after the release of the second quarterly report, Fang Xuegang, president of Maersk Line Greater China, said that the only thing that can be judged is that freight rates will be more stable than in the past year.
In the interview, Fang Xuegang also talked about the impact of the recent cyber attacks on the group, cooperation with e-commerce platforms, and the progress of the acquisition of Hamburg Süd, and explained Maersk’s coping strategies against the background of frequent consolidation in the container shipping industry.
It is worth mentioning that although the group expects that the cyber attack will have a negative impact of 200-300 million US dollars on the third quarter financial report, Fang Xuegang emphasized that the group reiterated its profit expectation for the whole year of 2017, that is, the actual value of the shipping and logistics business segment. Profit of more than $1 billion (excluding the impact of the acquisition of Hamburg Süd).
Container demand will grow by 2%-4%
In the second quarter of 2016, the actual loss of Maersk Line was 139 million U.S. dollars, and it turned around year-on-year this year.
Fang Xuegang said that the development of world trade this year is better than expected, the demand in Europe and North America has gradually recovered, and shipping companies have become more self-disciplined in terms of capacity allocation, which has enabled the industry to reach a state of balance between supply and demand, and freight rates have also come out of the trough last year.
From the perspective of market fundamentals, Maersk said that in the second quarter of this year, the demand increased by 4% from the previous quarter, the designed supply capacity increased by 1.4%, and the freight rate increased by 7.6%. Compared with the same period in 2016, the volume of goods transported increased by 1.7%, and the freight rate increased by 22%.
However, the demand for import and export presents a different situation. Maersk Line’s exports from the Far East to Europe/North America rose 5.2%, but imports fell 5.6% as imports were less attractive on some routes, the data showed.
"There may be signs of fluctuations in individual quarters, but the overall trend is positive." Fang Xuegang revealed that the increase in the price of some raw materials has led to a decrease in the volume of imported goods, while consumer goods such as beer have maintained a strong growth momentum.
Overall, he believes that global container shipping demand is still expected to grow by 2% to 4%, and will be at a higher position in this range.
Due to the gradual recovery of container freight rates and the increase in cargo volume, Maersk Line reiterated its actual profit forecast for this year, that is, it will achieve an increase of more than US$1 billion compared with 2016 (loss of US$384 million in 2016).
Other business units in the Ocean Freight and Logistics business segment, including Maersk Terminals, Damco Logistics, Maersk Tug & Salvage, and Maersk Container Industry Ltd., expect actual profits in 2017 to be in line with 2016 ($0.5 billion in total in 2016).
In addition, at the end of June, Maersk Group was attacked by the cyber malware "Not Petya", which caused serious system shutdown and damage, especially for container shipping, terminals and Damco. However, Maersk said that from the perspective of cargo owners and their own forecasts, profit expectations remain unchanged.
"Our business and shipment volume will be affected in the weeks after the cyber attack, and this will also be reflected in the performance of the third quarter." Fang Xuegang said that the estimated loss is 200-300 million U.S. dollars, except for the order volume being affected , there will also be some operating costs for dealing with the crisis.
According to him, Maersk has restored all systems and has not lost any data.
The integration effect is beginning to appear
In the second half of last year, the Maersk Group proposed an organizational reform plan, and various business groups in the shipping and logistics business sector began to integrate. Fang Xuegang said that the current integration is still progressing as planned, and it is expected that by the end of 2019, the integration effect of a 2% increase in the return on invested capital will be realized.
In addition to Maersk Line's actual profit of US$327 million, Maersk Terminal's actual profit in the second quarter of this year was US$98 million, a year-on-year decrease of US$11 million, while Damco Logistics broke even, a year-on-year decrease of US$10 million.
Although Maersk said that the decrease in terminal profitability was due to the impact of exchange rates and taxes, and Damco was due to the pressure on the profits of marine products and high investment in product development, but only from the profit data, the integration effect does not seem to have appeared.
Fang Xuegang said that the integration work has just begun, and many synergies have not yet been brought into play, but judging from the current performance, the integration effect has initially emerged. "Maersk Line's cargo volume growth in Maersk Terminals is about 7-8%, and the strong business performance of Maersk Container Industry is an example of the realization of the integration effect."
In addition to Maersk's internal integration, mergers and acquisitions in the industry are also "non-stop". After Maersk announced the acquisition of Hamburg Süd, Japan's three major shipping companies announced the establishment of a new container shipping company ONE, and COSCO Shipping and SIPG jointly launched a tender offer for OOCL.
S?ren Skou, CEO of Maersk Group, said in an interview with the media that in the next ten years, the number of global carriers will be reduced to 5-6. Fang Xuegang also believes that industry integration is the general trend, and it has also improved the stability of services.
At present, Maersk Line's acquisition of Hamburg Süd is progressing as planned and still needs to be approved by relevant agencies. It is expected that the acquisition will be completed in the fourth quarter of this year.
As for the response to the wave of integration, Fang Xuegang also behaved "indifferently". He said that the group will continue to participate in the process of industry integration, but there is no new plan before the completion of the acquisition; he also agrees that the increase in future capacity will mainly rely on "integration". On the one hand, continue to optimize services and improve customer experience.
To a certain extent, these two aspects complement each other. The integration of various businesses in the shipping and logistics sector is precisely to improve operational efficiency. At the same time, it will continue to promote the digital strategy that Maersk Group has always pursued.
In March of this year, Maersk cooperated with IBM on blockchain technology to develop a file transfer system. According to Fang Xuegang, at present, each of Maersk's ships is equipped with several sensors, which will collect various data in the operation of the ship for refined management.
"For example, fuel consumption is collected in real time. Through the collection and analysis of fuel data, planning routes and even docking times, fuel costs can be reduced, and fuel is a very important part of the cost." Fang Xuegang said.
In addition, in terms of cooperation with e-commerce platforms, Fang Xuegang said that although it did not exceed expectations, the cooperation with the Alibaba platform was good. At present, Damco has also launched its own freight forwarding platform, and more new projects will be launched in the future.