Maersk containers aboard the container ship Hammonia Husum as it leaves Portsmouth harbor. (Photo by Andrew Matthews / PA Images via Getty Images)
Andrew Matthews | PA Images | Getty Images
Shipping companies are locked in a “significant bottleneck” as global demand increases capacity and increases freight rates, Maersk CEO Soren Skou told CNBC on Wednesday.
Maersk, the largest shipping company in the world, slightly beat profit expectations in the fourth quarter on Wednesday, delivering an optimal outlook for 2021 after an ‘exceptional but challenging quarter’.
Show explained that after a 15% drop in Maersk’s volumes in the second quarter of 2020, the sharp decline by the end of the year, especially in the US and Europe, global trade to a 5% increase on seen an annual basis.
“This has caused a significant bottleneck in terms of lack of capacity and lack of cargo containers that has driven freight rates higher,” Skou said.
Maersk shares fell more than 8% in early trading.
“Completely unknown”
After Skou reduced capacity during the second quarter, Skou told CNBC that Maersk and other airlines are now using their full capacity for cargo containers again.
“We are therefore trying to deal with an increase in demand that is completely unprecedented, both an increase in demand because consumers are spending, but also an increase in demand because a large stock has started up again, as large retailers are actually stopped buying goods in Asia in the second quarter of 2020 and until the summer, ”he said.
The Danish company, which is considered a clockmaker for world trade, achieved quarterly earnings before interest, tax, depreciation and amortization (EBITDA) of $ 2.71 billion, according to a survey by Refinitiv.
This was an increase of 85% compared to the same period last year, while revenue increased by 16% year-on-year to $ 11.3 billion, as the surge in demand for goods began in the previous quarter , accelerated.
The company now expects an EBITDA of between $ 8.5 billion and $ 10.5 billion in 2021, compared to $ 8.3 billion last year, and notes that the outlook is still affected by the Covid-19 pandemic and its impact on demand patterns.
In the earnings report, Show said Maersk is confident that it will continue to increase its earnings as “the economic situation normalizes in 2021 and beyond.”
“Given the current exceptional situation where demand has led to supply chain bottlenecks and equipment shortages, the first quarter of 2021 is expected to be stronger than the fourth quarter of 2020,” the company explained in the report.
Empty containers
Reports emerged in January that shipping companies had rejected tons of US agricultural exports worth hundreds of millions of dollars in the last quarter of 2020 and instead wanted to send empty containers back to China to be filled with more profitable goods.
Meanwhile, the crippling shortage of containers increased by 300% during the increase in global demand, leading to delays for goods shipped from China.
“For the transport companies, it is of course more attractive to have income in the container in both directions, but it is clear that I have also heard stories about transport companies that have decided to turn empty containers and send them back to Asia, rather than wait another week or two to fill US exports, ‘Show told CNBC’s “Squawk Box Europe” on Wednesday.
He added that Maersk had “worked hard” to keep promises to US executives.