MAERSK Group CEO Nils Andersen has decreed the container line unit must make US $150m profit in the final quarter.
He said container freight rates had dropped "quite significantly in the second half of the third quarter", with the only silver lining being continually low bunker costs.
"I think the low growth has taken everybody by surprise," Mr Andersen said. "It was below what we expected and definitely did not meet our hopes for the peak season."
Nevertheless, Maersk Line actually increased its throughput by 1.1 per cent in the period, to 2.427 million TEU, against a contracting market, and with year-on-year capacity growth of 6 per cent its average freight rate took a hit and was 19 per cent lower at $2,163 per FEU, the Loadstar reported.
"Rates determine our profitability much more than volume," he said, who declined to comment on the percentage of the container line's Asia-Europe liftings being sourced from the spot market.
Maersk Line is in the middle of contract negotiations with its Asia-Europe customers, he explained.
"We have to see where it goes", he said, "we will know when we see how many contracts we close and at what level, and that goes for both the European and US trades, which are generally closed around May."
Mr Andersen said the flagship carrier needed to make a further $150m profit in the final quarter in order to meet the group's revised guidance level.
A key part of the "accelerated" $250m annual cost reduction drive will be a 15 per cent cut of its land-based staff, reducing its global organisation "by at least 4,000 positions by the end of 2017".
Mr Andersen said the carrier's shared service centres would probably account for many through increased levels of natural wastage.
The dramatic about-turn in the container line's results obliged the conglomerate to issue a profit warning on October 23 and to slash its outlook for Maersk Line for 2015 by $600 million to $1.6 billion.
"Clearly less than satisfactory", said Maersk Line chief executive Soren Skou, reflecting on the carrier's performance in the third quarter.
Revenue plunged by over $1 billion compared with the same period of 2014, and its net profit collapsed by 61 per cent to $264 million versus $685 million the year before.
Mr Skou said: "We will accelerate efforts to drive out cost and we will reduce capacity to increase network utilisation. We have a cost-effective network and a strong competitive position. We are determined to keep it that way."
Meanwhile, Friday's Shanghai Containerized Freight Index (SCFI) offered little comfort: its Shanghai-North Europe component gave up a third of its general rate increase gain of the previous week and shed $314 per TEU to $674 per TEU, confirming Maersk's belief that there will be "no market recovery within 2015".
WORLD SHIPPING
10 November 2015 - 20:38
Maersk CEO demands container line profit of US$150m in final quarter
MAERSK Group CEO Nils Andersen has decreed the container line unit must make US $150m profit in the final quarter.
WORLD SHIPPING
10 November 2015 - 20:38
Maersk CEO demands container line profit of US$150m in final quarter
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