Maersk, the world’s second-largest container shipper, has delivered a surprising update to investors, reporting stronger-than-expected performance in the second quarter of 2024. After starting the year with caution, Maersk has revised its operating profit forecast to between $3 and $5 billion for 2024, having already earned $1.1 billion in the first half. Despite ongoing uncertainties, including geopolitical tensions and disruptions in the Red Sea, the company’s outlook has brightened, driven by robust market demand and strategic foresight.
Adapting to a Resilient and Dynamic Market
CEO Vincent Clerc has been vocal about the company’s recent performance, highlighting the container market’s unexpected resilience. Reflecting on the transition from pandemic-induced challenges to the sharp decline in rates and volume in 2023, Clerc noted that Maersk has been buoyed by strong market demand across all segments, despite ongoing disruptions in the Red Sea. This resilience has allowed Maersk to stabilise and even grow its volume, supported by a market that has begun to absorb these global disruptions.
The company’s profitability in ocean shipping has seen a positive trajectory, driven by higher freight rates that have enabled a 5.6 percent margin, despite rising operating costs. The additional distances necessitated by rerouting ships around Africa have significantly increased fuel consumption, pushing costs to new heights. Maersk also observed that shippers have accelerated their operations, likely in anticipation of further disruptions, port congestion, and potential trade tensions between the U.S. and China, exacerbated by the upcoming U.S. presidential election.
Strategic Renewal and Sustainable Growth
As Maersk moves into the third quarter, Clerc emphasised that the company is set to benefit further from the full impact of higher rates, particularly given Maersk’s substantial contract business. Clerc pointed to strong growth in Chinese exports and expressed confidence that a U.S. recession is not imminent. He adjusted the global container market growth forecast to between 4 and 6 percent, up from an earlier estimate of 2.5 to 4.5 percent.
However, uncertainty remains regarding the potential rush to move Christmas merchandise and the status of year-end inventory levels. Clerc suggested that freight rates may have peaked as congestion eases and new capacity enters the market.
In contrast to many of its competitors, Maersk has been conservative in placing new orders, with industry analysts noting that other top carriers now have larger order books. Yet, Maersk is poised to accelerate its fleet renewal programme, increasing its capital forecast by $1 billion annually to between $10 and $11 billion. The company plans to order 50 to 60 new containerships, focusing on fleet renewal rather than expansion, maintaining its existing fleet size of 4.1 to 4.3 million TEU.
Maersk’s strategy for new orders is firmly rooted in sustainability, with a goal to equip 25 percent of its fleet with dual-fuel engines. The company has been clear that new vessels will be ordered only if they offer green fuel options, underscoring Maersk’s commitment to reducing its environmental footprint. Clerc acknowledged that the future of maritime fuel is likely to involve multiple technologies, with Maersk actively securing offtake agreements for liquefied bio-methane (bio-LNG).
The Essential Role of Supply Chain and Environmental Visibility Software
In this evolving landscape, the need for supply chain and environmental impact visibility software is becoming increasingly critical. As shipping lines, such as Maersk, navigate the complexities of global shipping, real-time data insights are essential for Beneficial Cargo Owners (BCOs), Logistics Service Providers (LSPs) and future innovation within the industry to derive greater value. These insights allow them to make informed, business-critical decisions that can mitigate disruptions and optimise their supply chains.
The integration of such visibility solutions will not only help track and manage environmental impacts in real-time but also enable more agile and responsive operations. As the companies push forward with their sustainability goals, this technology will be indispensable in ensuring that the industry can adapt quickly to changes in the market and maintain a competitive edge.