Maersk’s third-quarter profit slumped by 43% to $429 million, missing market expectations and sending its shares down almost 10% in early trade. “The result is unsatisfactory, but driven by low prices,” Maersk CEO Søren Skou said.
The poor result is significant for CEOs, left questioning whether spiraling supply-chain costs caused by Hanjin’s woes would have to be passed onto customers. Maersk’s experience indicates the industry oversupply pressures that brought down the South Korean container carrier are continuing to dog the market.
Skou said freight rates in the three months through September were down 16% compared to the previous corresponding period. Rates, however, had increased by 5.5% since the 2016 second quarter, the first time they had risen quarter-on-quarter since the third quarter of 2014.
Maersk’s result also comes a day after South Korea announced it would establish a state-backed ship financing company to help support local shipping companies. The news sent Hanjin shares soaring by 25%.
Hanjin, the world’s seventh-largest container carrier, filed for bankruptcy on August 31 after succumbing to weaker global trade and an oversupply of vessels in the industry. Its demise left 93 ships stranded at 51 ports in 26 countries, causing shipping costs to jump by as much as 50% as customers scrambled to find alternative vessels.
At the time, Gerry Wang, the CEO of leasing company Seaspan, said the fallout was a “huge nuclear bomb” shaking up the cornerstone of globalization. But Wang also acknowledged that the market pressures that brought Hanjin down could send prices lower again.
By that same measure, that means other companies could be pushed to the brink, creating more price volatility—though the South Korean government’ intervention could help smooth things out, at least to a degree.
Maersk isn’t predicting a turnaround in prices any time soon. In its outlook statement, the Danish company said it still expects to post a full-year result significantly down on last year. It also expects global demand for seaborne container transportation to have increased by around 2%, in line with previous expectations of 1-3%.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
0
1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
