Maersk containers on board the Hammonia Husum container ship leaving Portsmouth Harbor. (Photo by Andrew Matthews / PA Images via Getty Images)
Andrew Matthews | PA pictures | Getty Images
Container shipping companies are in “severe bottleneck” as resurgent global demand expands capacity and increases freight rates, Maersk CEO Soren Skou told CNBC on Wednesday.
Maersk, the world’s largest container shipping company, marginally outperformed fourth-quarter earnings expectations on Wednesday, posting an optimistic outlook for 2021 after an “exceptional but challenging quarter”.
Skou explained that after Maersk volume fell 15% in Q2 2020, the strong rebound towards the end of the year, particularly in the US and Europe, resulted in world trade returning 5% year over year.
“This has created a significant bottleneck in terms of capacity and container shortages, which has resulted in higher freight rates,” said Skou.
Maersk stock fell more than 8% in early trading.
After the capacity was reduced during the slump in demand in the second quarter, Skou announced to CNBC that Maersk and other airlines are now returning to their full container capacity.
“So we’re trying to cope with an unprecedented surge in demand, both an increase in demand because consumers are spending and an increase in demand because inventory started when big retailers actually stopped in Asia shopping in the second quarter of 2020 and well into summer, “he said.
The Danish company, a pioneer in world trade, posted quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 2.71 billion, slightly above analysts’ forecast of $ 2.68 billion, according to a survey by Refinitiv US dollar lies.
This represents an 85% year-over-year increase, while revenue rose 16% year over year to $ 11.3 billion as the recovery in demand for goods accelerated in the previous quarter.
The company now expects EBITDA between $ 8.5 billion and $ 10.5 billion in 2021, compared to $ 8.3 billion in the previous year. The outlook will continue to be influenced by the Covid-19 pandemic and its impact on the demand pattern.
In the earnings report, Skou said Maersk is confident that earnings will continue to rise as “the economic situation normalizes in 2021 and beyond”.
“Given the current exceptional situation in which the surge in demand has led to bottlenecks in the supply chain and a lack of equipment, the first quarter of 2021 is expected to be stronger than the fourth quarter of 2020,” the company said in the report.
In January, it was reported that shipping companies turned down tons of US agricultural exports valued at hundreds of millions of dollars in the final quarter of 2020, and instead sent empty containers back to China to be filled with more profitable goods.
Meanwhile, a crippling shortage of containers during the resurgence of global demand led to a 300% increase in shipping costs and delays in goods being shipped from China.
“It is obviously more attractive to the shippers, if you will, to have revenue in the container in both directions, but I’ve also heard stories of shippers who have chosen to flip empty containers and send them back to Asia instead of waiting or waiting two weeks to replenish US exports, “Skou told CNBC’s Squawk Box Europe on Wednesday.
He added Maersk had “worked hard” to keep promises to US export customers.