Danish container giant Maersk had revenues of $12.4 billion in the first quarter of 2024, down from $14.2 billion at the same time in 2023.
The shipping company posted an operating profit of $210 million, down more than 90 percent from $2.5 billion in the first quarter of 2023, when the market was still strong. However, the result was a significant improvement from the fourth quarter of 2023, when the company lost $436 million
The company is increasing the lower part of the guidance for 2024, as a result of persistent disturbances in the Red Sea. The company now expects a result of between 0 and minus 2 billion, against the previous interval of between 0 and 5 billion in the minus.
In addition to shipping, terminal revenues contributed to the result being stronger than expected.
Uncertainty in the Red Sea
The container shipping companies have received a boost from the large-scale diversion around the Cape of Good Hope, against the background of the Houthi rebels’ many rocket attacks against ships in the Gulf of Aden and the Bab-el-Mandab Strait off Yemen. It has benefited in the form of longer average sailing distances, especially on the routes between Asia and Europe.
The situation in the Red Sea, as well as higher demand than expected, meant that Maersk sailed in better revenues than expected. However, the company expects that the increasing tonnage entering the market in the second half of 2024 will counteract the gain.
A possible normalization in the Red Sea will put further pressure on the situation, but the company emphasizes that this does not seem likely in the immediate future.
When the disruption escalated last December, container rates skyrocketed. The Drewry World Container Index, which measures global shipping rates for 40-foot containers, tripled in two months. Lately, the index has fallen back a bit, and on 25 April it stood at 2.706, up from 1.382 dollars on 30 November last year.
Increasing tonnage
After the festive atmosphere in the container market through 2021 and parts of 2022, the hangover really set in for the shipping companies in 2023. Collapsing demand and a large increase in newly built ships destroyed the market. Even after the disturbances in the Red Sea, the rate index is down 75 percent from the peaks in the first half of 2022.
On Tuesday, the Maersk share fell by just over 5 per cent from the start.
From the top, the stock has plunged by more than 35 percent. In the last month, however, the rate has received a boost of 15 per cent, which limits the decline so far this year to 10 per cent. The rates are still far above the levels seen before the corona pandemic.
