Stock Market

“Maersk Foresees Dipping Trend in Sea Container Demand”

From the bustling docks of Copenhagen, news broke out last Friday as A.P. Moller-Maersk, the big kahuna of shipping companies, foretold a sharper drop in the world’s hunger for sea-borne container shipments this year. The cause? A lukewarm global economy paired with businesses trimming down their stockpiles.

With its mighty 17% share of the global market, Maersk, one of the globe’s largest box carriers, carries a broad range of goods for the likes of retail behemoths such as Walmart, the sportswear giant Nike, and household name Unilever.

“Expect a slower global economic engine, given the strain from hiking interest rates and the looming threat of a slump across Europe and the US,” warned the Danish shipping giant in a statement.

Riding the wave of elevated freight rates from high customer demand and port congestions due to the pandemic, Maersk celebrated an earnings bonanza last year. However, this year, freight rates took a nosedive amidst the world’s economic downshift.

Even as the tides have changed, Maersk revealed a gleam of positivity, announcing second-quarter earnings that outshone predictions and tightening its profit outlook for the rest of the year.

The quarter’s EBITDA (earnings before interest, tax, depreciation and amortisation) slipped to a still-impressive $2.91 billion from the lofty $10.3 billion of yesteryear, surpassing the $2.41 billion that the Wall Street wise guys had anticipated. The revenue stream also thinned, shrinking 40% to $13.0 billion.

Maersk is now anticipating an underlying EBITDA of between $9.5 billion and $11 billion, up from the previous forecast of $8 billion to $11 billion.

However, it wasn’t all smooth sailing. The number of containers loaded onto ships between April and June dipped by 6% compared to the same period last year, with average freight rates cut in half.

“In the face of drastic shifts in market conditions caused by companies slimming down their stock and the subdued growth climate following the pandemic-driven years, our second quarter performance played a big part in ensuring a sturdy first half of the year,” expressed Vincent Clerc, the company’s head honcho, in a statement.

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