Daily Management Review

No Indication Of Easing Of Global Freight Market In 2020, Says Maersk CEO


No Indication Of Easing Of Global Freight Market In 2020, Says Maersk CEO
There are currently no signals about any change taking place in the currently red-hot global shipping market for the rest of this year, according to the chief executive of the Danish shipping giant A.P. Moller-Maersk.
The company raised its outlook for 2021 once again on Thursday following the growth in global freight rates which has been caused by a congestion of the global supply chain.
At a time when there was higher consumer spending and growing demand for products as the global economy recovers from the pandemic, the cost of transporting freight has reached record levels globally because the coronavirus pandemic has driven a world wide shortage of container ships as well as logjams at ports because of local breakout of Covid-19 infections – such as at some ports in China,
"Nothing in our data suggests that the situation will change this year," Maersk Chief Executive Soren Skou said. The company now expects a growth of between 7 and 8 per cent in global trade volumes for the current year compared to 2020, he said.
"We see very, very strong end-user demand combined with re-stocking and the fact that capacity in ports, warehouses and on ships is not fully utilized due to COVID-19," he said.
He added that the current impasse in the global supply chain is being partly caused by about 9 to 10 per cent of the global container capacity currently being forced to wait outside various ports all around the world as the ships wait to discharge. One of the most prominent examples cited by Skou was that of Long Beach port in Los Angeles where about 60 container vessels are waiting to discharge their cargo.
One in five containers that are shipped worldwide is handled by Maersk. The firm now expects its full year underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) to reach between $22 billion and $23 billion compared to the company’s previous estimate of the metric being between $18 billion and $19.5 billion for the same period.
Preliminary earnings before interest, tax, depreciation and amortisation (EBITDA) of close to between $7 billion and EBIT of nearly $6 billion for the current year was also reported by the shipping company which is slated to release its complete third quarter earnings report on November 2.