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Maersk Announces Sharp Price Hikes On 20ft Dry Container From Asia Global, May 30, 13

Giant container shipping line company AP Moller-Maersk has announced that its rate will increase from the current level of USD 668 per 20 foot container to almost double that figure on its main Asia to Europe route. Howver, there is uncertainty as to whether Maersk will be able to persuade customers to agree to the full hike. AP Moller-Maersk’s vessels comprise around 15 percent of world container shipping capacity.


According to figures from the Shanghai Shipping Exchange, freight rates have been slumped by 41 percent since the end of the first quarter 2013, from USD 1,140 per 20 ft container, due to the current global slow developing economy and to the presence of too many freighters built before 2008.

Nevertheless, the company claims to be able to pull off the feat starting on 1 July. In fact, shipping companies only unusually end up getting all of an announced rate hike since the eventual price paid is contingent on negotiations between freight forwarders, customers and shipping firms.
“If they do not succeed we are expecting a downgrade of the full-year outlook in connection with the second-quarter earnings report,” Alm. Brand Markets equity analyst Jesper Christensen said.
Maersk Line will reveal its second-quarter earnings in August.
Last week it unveiled a better-than-expected Q1 profit and repeated its outlook for Maersk Line to report a 2013 result surpassing that of last year.

Break even on the Asia to Europe route is between USD 1,000 and USD 1,200 per 20 ft container, Christensen estimated.

“If current container freight rates stay on this level for the rest of this year, there is no doubt they will have trouble reaching the full-year guidance,” Nykredit Markets equity analyst Ricky Rasmussen told Reuters.
Other shipping companies, such as Hapag-Lloyd and China’s Coscon Container Lines, have also announced that they will be upping their rates by up to USD 1,000 to compensate for their losses. A 36 percent plunge in spot rates since March has left most container shippers operating at a loss.
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