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Nov.14, 2016

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MAERSK'S THIRD-QUARTER LOSS A HARBINGER FOR INDUSTRY M A E R S K LI N E D E LI V E R E D a not her sta rk reminder of how deep industry losses will end up this year, reporting a third-quarter loss of $116 million as growing volume was unable to offset a sharp drop in revenue. The Danish carrier said it now expects its full-year result to be significantly lower than the $1.3 billion reported in 2015. Shipping analyst Drewry expects industry losses to top $5 billion this year. Year-to-date losses at Maersk Line now stand at $230 million. In the third quarter, the liner division dragged down the overall Maersk Group profit to $426 million for the three-month period. Lower profits at APM Terminals and APM Shipping Services also pulled down the group result. "There was a lot of business to go around suddenly when Hanjin went under, and Maersk captured more than its fair share as we were seen as a safe haven," Maersk Group CEO Soren Skou said. "Hanjin did have a 3 percent market share so we are talking about one year of demand growth that was added to the market in the middle of the peak in the third quarter. Skou said the wave of consolidation disrupt- ing the market — CMA CGM acquiring NOL, the merger of China's Cosco and China Ship- ping, Hapag-Lloyd merging with United Arab Shipping Co., the plan to unite Japan's Big 3 carriers, the Hanjin receivership — is causing customers to carefully consider their ocean carrier choices. QUESTIONS REMAIN ON NEXT WAVE OF ALLIANCES WHERE WILL HYUNDAI Merchant Marine end up? That's the big question when it comes to the restructuring of shipping alliances. Hyundai said it has a memorandum of understanding to join the 2M Alliance of Mediterranean Ship- ping Co. and Maersk Line, but no changes to the existing vessel-sharing agreement have been filed with US reg ulators. The planned THE Alliance among MOL, NYK Line, "K" Line, Hapag-Lloyd and Yang Ming Line hasn't filed with the US Federal Maritime Commis- sion, either. Chances are Hanjin Shipping won't be joining that alliance as planned. The only certainty shippers have now other than that Maersk and MSC will stay partners is that the Ocean Alliance of China Cosco Shipping; CMA CGM, which now includes recently acquired APL; Everg reen Line; and Orient Overseas Container Line, will set sail in April.FMC Chairman Mario Cordero and commissioners William Doyle and Daniel Maffei in October voted to allow the Ocean Alliance to take effect, while commissioners Rebecca Dye and Michael Khouri voted against it. In a statement, Dye said she supports the VSA going forward, and her " 'no' " vote concerned other aspects of the process to arrive at the current version of the agreement." Khouri wasn't immediately avail- able to comment. The alliance still needs the go-ahead from European and Chinese regu- lators. The Ocean Alliance would have the dominant capacity position in the world's two largest trades, with a nearly 35 percent share of the Asia-North America trade, and a roughly 39 percent share of the Asia-Europe trade, according to shipping analyst Alphaliner. Spotlight 6 THE JOURNAL OF COMMERCE NOVEMBER 14.2016 6 THE JOURNAL OF COMMERCE

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