Analyst: Maersk will do fine with or without P3
The P3 carriers — Maersk, MSC and CMA CGM — have provided the Federal Maritime Commission with additional information on their proposed vessel sharing agreement, according to the FMC. The agreement will now go into effect in 45 days unless the FMC seeks to block it with an injunction.
"The commission is now in the process of reviewing the responses," the FMC wrote in an email to American Shipper. "The responses are confidential, and no revised agreement has been filed."
Meanwhile, Macquarie, the Australian investment bank, said in a research note issued last week that “P3 or not, the future looks good” for the A.P. Moller Maersk Group.
While the company’s stock price had fallen in recent weeks “partly due to concerns over the likelihood/timing of P3 Network approval,” Macquarie said, “We continue to think the P3 stands a very good chance of being approved. But more importantly, believe investors are underestimating the extent to which the Maersk Line cost base will improve even if this does not happen.
“Our analysis suggests Maersk Line profitability is less dependent on P3 approval than previously thought," it continued.
Macquarie said a major plus for Maersk is that the average vessel size it uses on the Asia-Europe route will increase from 9,300 TEU to 14,200 TEU by end of 2015, if the P3 is approved.
Even if the P3 is not approved, the average size of the ships Maersk will use on that trade lane will be only slightly less (14,100 TEU), as the delivery of Maersk Line’s Triple-E vessels enables its Asia-Europe fleet to be reduced from 83 vessels to just 55.
“In both scenarios, we estimate a reduction in Asia-Europe unit costs of around $1.1 billion, most of which should flow to the bottom line,” the report said.
Macquarie said the size of Maersk’s new Triple E ships, reported to be 18,340 TEU, is actually 19,400 TEU.
While approval of the P3 is the “preferred outcome, this is by no means essential for Maersk Line to deliver a large — and sustainable — improvement in its return on invested capital,” said Macquarie.
Macquarie said Maersk, in recent years, has “suffered from sustained under-investment on Asia-Europe. … On Asia-Europe, where many of vessels used by Maersk Line still fit into the 8,000-9,000-TEU category, the average vessel size employed by MSC and CMA CGM overtook that of Maersk Line in first half of 2011 and the first half of 2012, respectively. This was primarily due to the comparative lack of investment in very large container ships (VLCS) undertaken by Maersk Line in recent years.”
Macquarie said Maersk ranked just seventh in the average size of vessels it employed on the Asia-Europe trade route, behind not only MSC and CMA CGM, but also Hyundai, Cosco, NYK and Hanjin.
But Macquarie said that the profile of Maersk’s 100 largest ships will change when the capacity of vessels on order are taken into consideration.
“The capacity of Maersk Line’s largest 100 vessels will surpass that of both MSC and CMA CGM when all of the Triple-Es have been delivered, with this size advantage being particularly large for the largest 28 vessels (i.e. the 20 x 19,400-TEU Triple-E vessels plus the 8 x 15,500-TEU E-class vessels).”