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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS www.joc.com THE JOURNAL OF COMMERCE 27 By Bruce Barnard WHEN MAERSK GROUP in late October pinned all of the blame for slashing its 2015 profit outlook on a deteriorating container ship- ping market, it highlighted the depths of a crisis in the Asia-Europe trade ahead of what can only be called a make-or-break year for the world's largest shipping mar- ket. Asia-Europe, after all, accounts for some 40 percent of Maersk Line's cargo volume. But as the world's largest and most profit- able ocean carrier, Maersk can ride out the storm. It's still expected to produce a profit of around $1.6 billion in 2015, down from a previous forecast of $2.2 billion, but almost half the parent group's downgraded full- year profit forecast of $3.4 billion. That's a respectable result for a shipping and energy company facing low oil prices and low freight rates, Maersk CEO Nils Andersen said in a hastily arranged teleconference to update investors and analysts on the third-quarter downturn that extended into October. Maersk, the Asia-Europe market leader, brought the troubled trade back into focus just days later when news emerged that the carrier is laying up one of its 20 Triple E mega- vessels deployed on the route for at least six weeks following the canceling of a service. Rival carriers are less exposed to the Asia- Europe trade — Germany's Hapag-Lloyd, for example, generates approximately 17 percent of its traffic on the route — but they aren't as financially robust as Maersk Line to sit out a prolonged downturn in such a critical trade. The Asia-Europe trade outlook going into 2016 has become increasingly uncer- tain because of the big unknown: When will the Chinese economy, the key driver of the head-haul westbound leg, bottom out. Underscoring the deteriorating outlook was the Chinese central bank's decision to trim benchmark interest rates for the sixth time in 12 months in October in a bid to support an economy on track to grow at its slowest pace in 25 years. Questions also exist about whether the eurozone can maintain its snail's pace recovery — and boost its imports from China — going into 2016. Carriers simply don't know what's around the corner. "What we think is hap- pening is the renminibi has appreciated a lot versus the euro," Maersk's Andersen told CNBC recently. "First, we've seen a reduction in stocks and then disappoint - ing peak-season trade from Asia to Europe. Currency and competitiveness are surely playing a role. We need to understand the underlying conditions better." The China factor is impacting the entire industry. Hapag-Lloyd cut its initial public offering from $500 million to $300 mil- lion, trimmed the offer price and delayed its stock exchange debut in response to market volatility linked largely to China's declining exports and Volkswagen's emis- sions scandal. Hong Kong-based OOCL's Asia-Europe revenue slumped 32.3 percent in the third quarter, outpacing an 11.5 percent decline in traffic, in sharp contrast to its trans-Pacific operation, where cargo volume grew 9.5 per- cent year-over-year while revenue dipped just 0.2 percent year-over-year. Rotterdam's container traffic edged up just 1 percent in the first nine months of this year because of lower Chinese exports to the eurozone and sales to the deteriorating Rus- sian economy, even as its total throughput rose a respectable 5.4 percent on higher imports of cheaper crude oil. Some companies have managed to ride out the China downturn. Switzerland- based global forwarder Kuehne + Nagel, for example, credited a 9 percent increase in third-quarter operating profit in part to a switch to the U.S. containerized import trades from the troubled Asia-Europe route, where it has turned away low-margin, IS THIS THE BOTTOM? With China laboring and overcapacity growing, 2016 is shaping up as a turnkey year in the Asia-Europe trade