Maersk seeks to double shipping rates in fragile market

AP Moller-Maersk, owner of the world's biggest container shipping company, is "100 per cent certain" it can more than double freight rates in July despite market weakness that has seen prices fall by a third since March.

However, the Danish group, whose Maersk Line vessels make up about 15 per cent of world container shipping capacity, said its container shipping unit swung back to a $204 million profit in the first quarter from a $599 million loss a year earlier, beating forecasts.

While those results benefited from briefly improved prices, Maersk and other major players are now desperate to raise the industry’s traditionally volatile rates, after a fall in the past two months that left most trading at a loss.

Chief execeutive Nils Smedegaard Andersen said he had “no doubt” Maersk Line would be successful in its plans to hike rates to $1481 per 20-foot container from July 1st from $731 currently. Those spot rates, however, are traditionally only a basis for negotiation with clients and he also admitted that the outlook for the industry was bleak. The company cut its forecast for a rise in demand in 2013 to 2-4 per cent from 4-5 per cent earlier.

The group’s first-quarter net profit fell to $790 million, down about 30 per cent from the same period a year earlier which included $899 million in settlement for an Algerian tax dispute.– (Reuters)