Maersk sees weaker demand for shipping

Maersk sees weaker demand for shipping

Maersk's ship division saw revenue halve since last year when companies were trying to meet pent-up demand
Maersk's ship division saw revenue halve since last year when companies were trying to meet pent-up demand. Photo: JOHN THYS / AFP
Source: AFP

Maersk, the world's second-largest container shipping firm, said Friday it expects shipping volumes to fall this year as companies continue to reduce inventories.

The Danish firm had previously expected shipping volumes to be flat or dip slightly this year, but now sees them down one to four percent.

"The inventory correction observed since (the fourth quarter of) 2022 appears to be prolonged and is now expected to last through year end," it said, adding it expected its volumes to evolve in line with the market.

It said market demand would likely remain subdued as long as companies reduce their inventories.

In the second quarter Maersk's container ship division saw its revenue halved from the same period last year -- when companies were trying to stock up to meet pent-up demand following the end of pandemic lockdowns in most countries -- to $8.7 billion.

Read also

German industrial orders leap in June

The drop was "driven by a decrease in freight rates and loaded volumes", it said.

PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!

Overall revenues fell 40 percent to $12.9 billion, in line with analyst expectations.

Strong demand saw freight rates swell, but these have since fallen back to normal levels.

Net profits fell by 83 percent to $1.45 billion, but were much better than the $686 million analysts expected, which the company put down to measures to reduce costs.

"Cost focus will continue to play a central role in dealing with a subdued market outlook that we expect to continue until end year," said chief executive Vincent Clerc.

Last year the firm posted a massive profit of $29.19 billion thanks to strong demand and high rates, but had already warned 2023 would see a return to a more normal performance.

Maersk shares sank 4.3 percent in afternoon trading on the Copenhagen stock exchange.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.