Maersk containers on board 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
Container shipping lines are stuck in a “significant bottleneck” as the resurgence in global demand increases capacity and drives up freight rates, Maersk CEO Soren Skou told CNBC on Wednesday.
Maersk, the world’s largest container shipping company, marginally exceeded fourth-quarter earnings expectations on Wednesday, posting positive outlook for 2021 after an “exceptional but challenging quarter.”
Skou explained that after a 15% decline in Maersk’s volumes in the second quarter of 2020, the strong recovery towards the end of the year, particularly in the US and Europe, caused world trade to return to an increase of 5% on an annual basis.
“That has created a significant bottleneck in terms of lack of capacity and lack of containers, driving freight rates up,” said Skou.
Maersk shares were down more than 8% in early trading.
‘Completely unprecedented’
After removing the capacity during the slump in demand in the second quarter, Skou told CNBC that Maersk and other carriers have now returned to full container capacity.
“So we are trying to deal with an increase in demand that is completely unprecedented, both an increase in demand as consumers spend, but also an increase in demand as a large stock replenishment started, as large retailers actually stopped buying. of stuff in Asia in the second quarter of 2020 and well into the summer, ”he said.
The Danish company, seen as a model of world trade, posted a quarterly profit before interest, tax, depreciation and amortization (EBITDA) of $ 2.71 billion, fractionally more than analysts’ forecasted $ 2.68 billion, according to a Refinitiv poll. .
This represented an 85% increase over the same period last year, while sales increased 16% year over year to $ 11.3 billion as the recovery in demand for goods that began in the previous quarter accelerated .
The company now expects EBITDA of between $ 8.5 billion and $ 10.5 billion by 2021, compared to $ 8.3 billion last year, noting that the outlook is still affected by the Covid-19 pandemic and its impact on demand patterns.
In the earnings report, Skou said Maersk is confident it will continue to increase earnings as “the economic situation normalizes in 2021 and beyond.”
“Given the current exceptional situation where a surge in 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
Reports emerged in January that in the last quarter of 2020, shipping companies were rejecting tons of US agricultural exports worth hundreds of millions of dollars, opting instead to return empty containers to China to be filled with more profitable goods.
Meanwhile, a crippling container shortage during the resurgence in global demand drove shipping rates up 300% and delayed goods shipped from China.
“Obviously for the carriers it is more attractive to have income, if you want, in the container in both directions, but I have clearly also heard stories about carriers deciding to turn over empty containers and return them to Asia instead of waiting another week or two to fill it with US exports, “Skou told CNBC’s” Squawk Box Europe “on Wednesday.
He added that Maersk has “worked hard” to keep promises made to US exporting customers.