Maersk lifts guidance on strong freight rates

Maersk has increased its earnings outlook for the full year by nearly half on the back of strong rates and the “exceptional” demand in the container shipping sector.

It now expects earnings before interest, tax, depreciation and amortisation to be in the range of $13bn–$15bn, up from its early estimate of $8.5bn–$10.5bn.

The upgrade came as the carrier announced unaudited first quarter of the year revenues of $12.4bn and ebitda of $4bn, as average freight rates rose 35% in the quarter.

“The continued strong performance is mainly driven by the continuation of the exceptional market situation with surging demand leading to bottlenecks in the supply chain and equipment shortage,” Maersk said in a statement.

It also said it expects global demand growth for the whole of 2021 to be in the range of 5%–7%, up from 3%–5%, driven by US imports.

“Trading conditions for the quarters ahead remain subject to a higher than normal volatility due to potential changes in current demand patterns and the current disruptions in the supply chains and equipment shortages impacting the short-term container freight rates,” Maersk said.

The ongoing equipment shortage has also led Maersk to raise its capital expenditure outlook to $7bn from $4.5bn–$5.5bn, as it seeks to add containers to its fleet in an effort to improve service reliability.

Container freight rates are at all-time highs as supply chain bottlenecks, equipment shortages and limited ship capacity have intensified in recent weeks.

Cosco subsidiary OOCL yesterday reported that revenues had nearly doubled year on year in the first quarter of 2021, and all lines are expected to have benefited from strong demand and positive rates environment.

“The normalisation of the container market is taking longer than expected, due to ongoing supply chain bottlenecks and capacity constraints, exacerbated by the blockage of the Suez Canal, while container demand is supported by the greatest restocking cycle on record in the US,” said Jefferies analyst David Kerstens.

Maersk will release its full first-quarter results on May 5.