Maersk warns of slower demand for container shipping

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Shipping group A.P. Moller-Maersk warned on Friday of a steeper decline in global demand for shipping containers by sea this year prompted by muted economic growth and customers reducing inventories.

The company, one of the world’s biggest container shippers with a market share of around 17%, said it expects container volumes to fall by as much as 4%. It had previously forecast a decline of no more than 2.5%.

Maersk, one of the world’s biggest container shippers with a market share of around 17%, transports goods for retailers and consumer companies such as Walmart (NYSE:), Nike (NYSE:) and Unilever (NYSE:).

“Maersk continue to expect muted global macro-economic growth given continued pressure from higher interest rates and potential recessionary risk in Europe and the United States,” the company said in a statement.

Maersk posted record earnings last year due to high freight rates caused by high consumer demand and pandemic-related log jams at ports. But freight rates have tumbled this year amid a global economic slowdown.

The company on Friday posted second-quarter earnings above expectations and narrowed its profit forecast for the year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $2.91 billion in the quarter from $10.3 billion a year earlier, beating analysts’ expectations of $2.41 billion in a Refinitiv poll. Revenues fell 40% to $13.0 billion.

It now expects underlying EBITDA between $9.5 billion and $11 billion. It had previously predicted an underlying EBITDA of between $8 billion and $11 billion.

The company said the number of containers it loaded onto ships between April and June fell by 6% from a year earlier, while average freight rates halved.

“The second-quarter result contributed to a strong first half of the year, where we responded to sharp changes in market conditions prompted by destocking and subdued growth environment following the pandemic fuelled years,” Chief Executive Vincent Clerc said in a statement.