EMEA News
Maersk Slashes $2.3 Billion From its Annual Bunker Bill
AP Møller-Maersk (Maersk) says it managed to reduce its 2015 annual bunker spend by $2.3 billion, which fell to $2.987 billion, compared to $5.292 billion in 2014.
The reduction appears to be entirely a result of the significant fall in bunker prices last year, with Maersk noting in its recently released annual report that it paid an average of $315 per metric tonne (pmt) for bunkers in 2015, down from $562 pmt in 2014.
The figures suggest bunker consumption was actually up slightly, to 9.48 million metric tonnes (mt) in 2015 compared to 9.42 million mt in 2014, and Maersk noted on a per box basis bunker efficiency deteriorated by 1.0 percent to 931 kg/FFE.
In addition to last year's widely reported decline in freight rates, which Maersk said the drop in bunker prices played a key part, "the EBIT margin gap to peers narrowed considerably compared to 2014 as a consequence of the sharp decline in bunker prices, as well as Maersk Line's relatively higher exposure to the key Europe trades which was more impacted by the freight rate decline than other trades."
Despite the significant bunker savings, the toll of falling rates and tough market conditions weighed on Maersk Line's bottom line, with profit for 2015 falling to $1.3 billion compared to $2.3 billion in 2014.
Andersen noted in a major media interview last week that the collapse in crude prices combined with a plunge in container freight rates indicated a "massive deterioration" in the shipping business, and added that Maersk Line's average freight rate had plummeted by 25 percent between October and December.
"It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn't look like going up soon," Andersen was quoted as saying.
Maersk has extensive investments in oil that were supposed to act as a hedge against a slowdown in its shipping business, but that hedge has not worked as both shipping rates and oil prices have fallen in lock-step rather than moving in a negatively correlated direction.
"We call it the perfect storm for the group," said Anderson in the teleconference.
"Freight rates are lower. The external conditions are much worse," he said.
Andersen did however note that the company is "better prepared" for the downturn as a result of the amount of debt the company has trimmed since the financial crisis.
In December of 2014 Ship & Bunker reported that Maersk Line said it was not profiting from low bunker prices.
