Maersk raised its outlook sharply after a strong second quarter, helped by increased market volatility and continued demand for Asian exports that helped a sharp improvement in its container shipping business.
The Danish group said revenue increased 20% year on year, aided by a 4.1% rise in volumes. The Ocean division, which includes Maersk’s container shipping business, was the main driver of the improved results.
Maersk raised its full-year EBITDA forecast to as much as $12.5 billion from a previous upper range of $10 billion after the better-than-expected quarter.
Ocean division makes major change
The Ocean business delivered the biggest improvement, moving from an EBIT loss of $192 million in the first quarter to an EBIT profit of $935 million by the end of June.
Maersk’s other divisions also performed well.
Logistics and Services EBIT was $217 million, up from $173 million in the first quarter, while the Terminals division was relatively stable with EBIT of $458 million, up from $436 million in the first three months of the year.
“The environment in liner shipping is becoming more and more volatile, especially the imbalance between global trade flows,” said Maersk CEO Vincent Clerc.
The market has been characterized by robust broad-based demand for goods from Asia, which has persisted for two years now, Clerc says.
Capacity constraints push up freight rates
The second quarter was typified by an imbalance of trade flows, tight vessel capacity and increased congestion at major ports which led to increased freight rates.
Port congestion worsened in many regions, including Europe, the Middle East, West Africa and the east coast of South America.
These conditions have resulted in a more favorable pricing environment for container carriers and have strengthened Maersk’s ability to benefit from stronger rates despite the broader uncertainty affecting global trade.
The second quarter performance demonstrates the way fast shipping markets can flip, with volatile conditions, constrained capacity and uneven trade flows resulting in significant shifts in carrier profitability.
Maersk is enjoying a surge in demand and higher freight rates, enough to substantially increase its financial expectations for the full year.
