Maersk containers aboard the container ship Hammonia Husum, when it leaves the port of Portsmouth. (Photo by Andrew Matthews / PA Images via Getty Images)
Andrew Matthews | Images PA | Getty Images
Container shipping companies are locked in a “major bottleneck,” as resurgent global demand increases capacity and freight rates increase, Maersk CEO Soren Skou told CNBC on Wednesday.
Maersk, the world’s largest container shipping company, exceeded fourth-quarter profit expectations on Wednesday and posted an optimistic outlook for 2021 after an “exceptional and challenging quarter.”
Skou explained that after a 15% decline in Maersk volumes in the second quarter of 2020, the sharp rise towards the end of the year, especially in the US and Europe, saw world trade rise again by 5 % year-on-year.
“This has caused a major bottleneck in terms of lack of capacity and lack of containers, which has led to increased transportation rates,” Skou said.
Maersk shares fell more than 8% in early trading.
“Completely unprecedented”
After removing capacity during falling demand in the second quarter, Skou told CNBC that Maersk and other companies now have full container capacity deployed once again.
“So we’re trying to cope with an unprecedented increase in demand, both in demand because consumers spend, and also in an increase in demand because a big replenishment started, as the big retailers left of buying material in Asia in the second quarter of 2020 and well into the summer, ”he said.
The Danish company, considered a benchmark for world trade, recorded quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 2.71 billion, fractionally above the $ 2.688 billion forecast by analysts , according to a Refinitiv survey.
This was an 85% increase over the same period last year, while revenue rose 16% year-on-year to $ 11.3 billion as the rise in demand for goods accelerated as it began. the previous quarter.
The company now expects EBITDA of between $ 8.5 billion and $ 10.5 billion in 2021, compared to $ 8.3 billion last year, and noted that the outlook remains affected by the Covid-19 pandemic and its impact. in demand patterns.
In the earnings report, Skou said Maersk is confident it will continue to increase profits as “the economic situation normalizes in 2021 and beyond.”
“Given the current exceptional situation in which rising demand has led to bottlenecks in supply chains and equipment shortages, the first quarter of 2021 is expected to be stronger than the fourth quarter of 2020, ”the company explains in the report.
Empty containers
In January, shipping companies were reported to be rejecting tons of U.S. agricultural exports worth hundreds of millions of dollars during the last quarter of 2020, and chose to send empty containers to China to fill them with goods. more profitable.
Meanwhile, the shortage of containers during the resurgence of world demand caused shipping costs to skyrocket by 300% and caused delays in goods shipped from China.
“For carriers, it’s obviously more appealing to have revenue, if you will, in the container in both directions, but of course I’ve also heard stories about carriers deciding to turn around empty containers and send them back to Asia, in instead of waiting another week or two to fill it with U.S. exports, “Skou said Wednesday on CNBC’s” Squawk Box Europe. “
He added that Maersk has “worked hard” to deliver on promises to US exporting customers.