George Collard of global energy and commodity price reporting agency Argus Media on Wednesday (19 August) published an article summarising how bunker prices and other market forces have reduced Maersk’s bunker costs and boosted its earnings for the quarter:
Danish shipping giant AP Moller-Maersk’s profits more than doubled on the year in the second quarter, helped by lower bunker fuel costs.
The firm is the world’s biggest consumer of marine fuel and spent $766mn on bunkers in the second quarter, down by 37% from $1.21bn during the same period last year. Bunker prices paid by the firm in the period fell by 25% on the year to average $328/t and consumption was 16% lower at 2.3mn t because sailings decreased as a result of the Covid-19 pandemic.
“The global container trade declined by around 10% in the second quarter 2020, as a result of the Covid-19 pandemic impacting both supply chain and demand,” the firm said. Marine fuel prices declined as a result of lower demand.
Fuel costs had risen by 32% in the first quarter of this year because of the need to switch to more expensive fuels to comply with the International Maritime Organisation’s (IMO) 0.5% sulphur cap. The new regulation kicked in on 1 January.
Across the first half of 2020, Maersk’s bunker costs fell by 8% to $2.16bn.
The lower fuel costs helped mitigate a fall in revenue of just under 7% to $9bn in the second quarter because of lower container volumes. Maersk’s profit for the quarter was $443mn, compared with $153mn a year earlier.
Disposals, higher freight rates and lower container handling costs also helped boost profits.
Maersk in March suspended earnings before interest, tax, depreciation, and amortisation (Ebitda) guidance for 2020 of $5.5bn because of Covid-19, but now sees this year’s Ebitda between $6-7bn. Maersk said the new 2020 guidance is subject to “significant” uncertainty, including bunker prices.
Photo credit and source: Argus Media
Published: 20 August, 2020
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