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Damco narrows first quarter loss to US$9 million from $10 million

MAERSK's forwarding unit Damco reduced its first quarter loss to US$9 million from $10 million year on year, drawn on revenues of $683 million, which declined nine per cent.

Damco narrows first quarter loss to US$9 million from $10 million
14 May 2015 - 20:43

Damco narrows first quarter loss to US$9 million from $10 million

MAERSK's forwarding unit Damco reduced its first quarter loss to US$9 million from $10 million year on year, drawn on revenues of $683 million, which declined nine per cent.

Damco was Maersk's worst performing unit, with group CEO Nils Andersen saying it was at the same level as the year before, continuing to lose market share to rivals.

The company's loss of market share accelerated in the quarter, with ocean freight volume falling two per cent and air freight traffic down 19 per cent. The supply chain management business bucked the trend with volumes rising six per cent.

Meanwhile, Damco's rivals increased their volumes in the first quarter, noted Newark's Journal of Commerce. 

Panalpina's ocean traffic grew 5.1 per cent, and air freight traffic edged 0.6 per cent higher. Kuehne + Nagel's ocean traffic shrank by 0.7 per cent as it put profit ahead of volume and air freight traffic grew six per cent. 

Deutsche Post DHL increased ocean shipments by 2.3 per cent and air cargo, 2.3 per cent. CEVA's ocean and air traffic grew five per cent and 5.2 per cent respectively.

Damco's negative figures followed a six per cent drop in ocean traffic in 2014, when the market grew four to five per cent, and a 16 per cent fall in air freight in a market that expanded by three to four per cent.

Mr Andersen said Damco expects to make progress in cutting costs through the rest of the year, but also said it needs to increase volumes to make headway.

A return to profitability likely would place it among Maersk's potential divestments as the group concentrates on its core businesses, container shipping, port terminals, oil production and exploration and drilling, according to industry analysts.

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