Moeller Maersk nov. 1st,2018

Moeller Maersk is the world biggest shipping company with revenues of about 40bn $/yr. Moeller Maersk is actually due to low shipping rates and high bunker fuel prices in its key business not profitable. It was a conglomerate with an oil&gas business. This business was sold recently. The remaining oil&gas drilling activities are planned to go public. 

Potential motivation to buy Moeller Maersk shares is a bet on a turnaound of the container shipping market with higher freight rates hope sooner or more realistic later.  

Chances & Risks

The main chance is that the container shipping demand increases and the shipping capacity decreases thus freight rates increase and Moeller Maersk will regain profitability. Moeller Maersk has 350 own ships plus 400 chartered ships in service but only 9 ships are on order. Container ships have a lifetime of 20 - 25 years. That means it would require about 15 new ships/yr. to keep the actual capacity. 

The main risk is that countries like China support their shipbuilding and shipping business without considering profitability. 

Moeller Maersk aims to become a player in the logisitic market. There are already plenty of independent players in the market. I do not think this move will become the most successful one. It would be more promising if MM would focus on an optimization of the shipping core business.   

Another risk is that Moeller Maersk as successes in the core business are rare put the focus on green religious nonsense. Actually most articles about Moeller Maersk in Europa are about such nonsense (2). I would rather appreciate if Moeller Maersk would focus on such opportunities as establishing LNG as bunker fuel. It would help to reduce costs and fullfill environmental requirements (sulphur emissions). Due to its size and the the operatorship of terminals and harbour equipment it is in the ideal position. 


The Container Shipping Market 

A report by BIMCO estimates that 2018  250.000 TEU will leave the market while the new built is forecasted to 1.05 mio. TEU. That means a capacity increase of 3.9%. The demand is estimated to grow 4 - 4.5% (1). It does not look like a tighter market with higher rates in the near future.  

Maersk Block Chain Technology

Some reasons that Maersks logistic platform might not perform successful.."There are fantastic benefits to be had from a blockchain-enabled shipping platform: cost savings, reduced error, increased profit, etc. However, these benefits can’t outweigh the undeniable reality facing Maersk’s competitors: to join the TradeLens network is to make Maersk more profitable....Another obvious issue is that Maersk owns the intellectual property that the TradeLens platform is built on. Even assuming safeguards are put in place (to ensure that unfair advantage is not taken by Maersk or its agents), the optics are terrible." (3)

This is not a recommendation or proposal to do anything. It is my private personal opinion. I`m not independing as I own a position of Moeller Maersk shares. 


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A few references

3. 2018/11