Asciano halts the slip with Danish shipping container contract

ASCIANO appears to have halted the slide in market share lost to DP World, securing a crucial five-year contract with Danish shipping company Maersk Line.

By InvestSMART · 21 Jul 2011

By InvestSMART ·
21 Jul 2011

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ASCIANO appears to have halted the slide in market share lost to DP World, securing a crucial five-year contract with Danish shipping company Maersk Line.

Under the existing contract, Patrick moves approximately 503,000 containers, while the new deal, effective immediately, will see Patrick move an additional 190,000 containers per year. "The successful execution of this contract with Maersk Line is a significant achievement for our business and it's a testament to the strength of Patrick's container terminal operations," Asciano, chief executive officer John Mullen said.

Announcement of the deal comes as Asciano is due to release the findings of a company-wide review into its operations next month. Mr Mullen had said in February that he was open to selling poor performing assets, believing Asciano businesses were not achieving an adequate return on capital. That raised questions about possible intentions to sell off its container ports operation. Austock analyst Andrew Chambers said the contract means Asciano is now less likely to divest its port operations.

The market responded well to the announcement with Asciano shares rallying 4.63 per cent to close at $1.70.

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Frequently Asked Questions about this Article…

What contract did Asciano recently announce with Maersk Line?

Asciano announced a new five-year contract with Danish shipping company Maersk Line, a deal that takes effect immediately and boosts volumes for its Patrick container terminal.

How many containers will Asciano's Patrick terminal move under the new Maersk contract?

Under the existing arrangement Patrick moves about 503,000 containers; the new Maersk deal adds roughly 190,000 containers per year, bringing the combined total to about 693,000 containers annually.

How long is the Maersk Line contract and when does it start?

The contract is for five years and is effective immediately, according to Asciano's announcement.

What did Asciano's CEO John Mullen say about the Maersk contract?

CEO John Mullen said the successful execution of the contract is a significant achievement and a testament to the strength of Patrick's container terminal operations.

Does this Maersk deal make Asciano less likely to sell its port operations?

According to Austock analyst Andrew Chambers, the new contract makes Asciano less likely to divest its port operations, though the company is still conducting a wider review of its businesses.

How did the market react to Asciano’s Maersk contract announcement?

The market responded positively: Asciano shares rallied 4.63% on the announcement, closing at $1.70.

Did the Maersk contract help Asciano recover market share from DP World?

The deal appears to have halted the slide in market share that Asciano had been losing to DP World, according to the report.

When will Asciano release the findings from its company-wide review?

Asciano is due to release the findings of its company-wide review into operations next month, the company said.