A crane loads a sea container with the brand A.P. Moller-Maersk onto a freighter.
Balint Porneczi | Bloomberg | Getty Images
Maersk, the world’s largest container shipping company, posted a sharp increase in revenues in the second quarter as congestion and bottlenecks continue to drive up shipping rates.
The company Friday reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.1 billion, up 200% from the $1.7 billion reported in the same period last year. Revenue rose nearly 60% to $14.2 billion.
Container rates have skyrocketed as the global economy recovered from the Covid-19 pandemic and demand for commodities recovered, while container shortages put pressure on supply chains. More recently, a combination of increasing orders from retailers and slower turnaround times due to Covid-19 outbreaks in several countries has pushed prices even higher.
“Right now we have unmet demand in container shipping. Global capacity is unable to cover all demand and that is what is driving freight rates up,” Skou told The Washington City Times’s Squawk Box Europe on Friday.
“At the same time, of course, we’ve had congestion in Los Angeles, we’ve had the Suez Canal closed for a week, we’ve closed one of the biggest ports in China for over a week in the last quarter, and that’s taking our capacity out of the market, which exacerbates the problem, so to speak.”
For example, tariffs from China to the United States have reached new all-time highs of more than $20,000 per 40-foot box, more than 500% higher than a year ago, according to freight tracking company Freightos.
Skou said companies were trying to meet robust retail demand while building inventories, evidenced by extremely low inventory-to-sale ratios in the US, contributing to strong container demand that is likely to continue at least into the next quarter. will persist.
“We continue to build a better quality Ocean business with more long-term contracts, a fast-growing and profitable logistics company with more than half of the 38% growth coming from Ocean’s top customers, and a value-creating Terminals business, which doubled its profitability . in the quarter,” Skou said in a statement accompanying the results.
Maersk’s return on invested capital is now at 23.7% for the past 12 months, and Skou said the company’s earnings and cash flow will enable it to make targeted acquisitions while returning money to shareholders.
The Danish giant also announced on Friday the acquisition of parcel carriers Visible Supply Chain Management and B2C Europe, as part of its plans to expand its e-commerce capabilities.
“The outlook for the third quarter is strong and we expect the current momentum in Ocean to continue into the fourth quarter, which will also benefit our Terminals business,” Skou said in the statement.
Maersk on Monday upgraded its 2021 expectations to underlying EBITDA between $18 billion and $19.5 billion, with expected free cash flow of at least $11.5 billion.