Maersk sees slight pick up in container traffic next year

A shift in focus from market share to lowering costs has helped Maersk improve its profit margins. (Reuters)
Updated 15 November 2019

Maersk sees slight pick up in container traffic next year

COPENHAGEN: Shipping group A.P. Moller-Maersk sees scope for a slight pick up in global seaborne container traffic in 2020 compared with this year, with ongoing trade tensions limiting the chances of stronger growth.

Maersk, the world’s biggest container shipper, said on Friday that it expected global container demand to grow by 1-3 percent next after compared with
1-2 percent in 2019.

“The continued weakening of global sentiment, above all in the manufacturing sector, reduces the likelihood of a growth pick-up in 2020,” the company said in
a statement.

Despite headwinds from the US-China trade war, Maersk last month raised its expectations for 2019 profit, prompting its shares to jump more than 7 percent.

The company on Friday published a full set of results for the July-to-September period, reaffirming that it is on track to improve its profit margin albeit on slightly lower revenue.

The pick-up in profitability is driven by capacity management and cost control, with unit costs — the cost of moving a container on global seas — down 3 percent in the third quarter.

“We will continue our focus on profitability and free cash flow in the fourth quarter and into 2020,” CEO Soren Skou said in a statement.

Maersk has in several quarters struggled to keep costs under control amid low freight rates, rising fuel prices and a slowdown in container shipping.

As Maersk shifts its focus from market share to lowering costs, it said it expected underlying growth in its ocean business to be slightly lower this year than average market growth.

Skou has overseen a major shift in Maersk’s strategy, announced in 2016, which has included selling off its oil and gas business to focus on its container and logistics business for customers including Walmart and Nike. 


Daimler’s major partner BAIC plans to upstage rival Geely

Updated 12 min 38 sec ago

Daimler’s major partner BAIC plans to upstage rival Geely

  • The group sets in motion a strategy to double its stake to around 10 percent

FRANKFURT: Daimler’s main China joint venture partner BAIC Group has set in motion a plan to double its stake to around 10 percent and win a board seat in the German luxury carmaker, as it aims to upstage rival Geely, sources said.

State-owned Beijing Automobile Group Co. Ltd. (BAIC), which already owns a 5 percent shareholding in Daimler, has started buying the German company’s shares from the open market, said the sources who were briefed on the matter.

BAIC is currently Daimler’s third-largest shareholder but a stake of 10 percent will make it the biggest shareholder, surpassing its Chinese automaking rival Zhejiang Geely Holding Group which owns 9.69 percent of the German automaker and is seeking to expand its partnership with Daimler in China.

With the shareholding of around 10 percent, BAIC is looking to secure a seat at Daimler’s supervisory board, which Geely does not currently have, the sources said.

HSBC, which advised BAIC on its 5 percent stake purchase in Daimler earlier, is helping the Beijing-based group in the new investment, one of the sources said.

Daimler said in a regulatory filing last month that HSBC held 5.23 percent in Daimler’s voting rights directly as well as through instruments such as equity swaps as of Nov. 15.

Daimler said it had not received any notification about BAIC having raised its stake. Daimler’s China chief Hubertus Troska said on Friday “we welcome long-term investors in Daimler.”

Asked about BAIC and its potential to become a larger shareholder, he added, “we like each other. Let us see how things develop.”

A third source familiar with BAIC’s thinking said that BAIC wanted to be a bigger shareholder than Geely in Daimler in order to be seen as the German automaker’s senior-most partner in China. Reuters reported in November that BAIC had signaled intentions to extend its investment in Daimler, citing sources familiar with the matter. BAIC has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers’ main joint venture, Beijing Benz Automotive.

Two months before its 5 percent stake purchase was announced in July, sources said that BAIC wanted to invest in Daimler to secure its investment in Beijing Benz Automotive.

The partners also planned to revamp manufacturing facilities to make Mercedes Benz-branded trucks via their commercial vehicle joint venture Foton Daimler Automotive (BFDA), Reuters reported in August citing a document and sources familiar with matter.

BAIC built its 5 percent Daimler stake after Li Shufu, chairman of Zhejiang-based private automaker Geely, built a 9.69 percent stake in Stuttgart-based Daimler in early 2018.