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Lower freight rates and volumes begin to bite

Hard evidence of shipping lines’ waning profits is becoming evident as recently released financial results begin to reflect less-than-record numbers.

Thanks to lower freight rates and volumes, as demand softened, the likes of Danish major Maersk saw a $5.7 billion decrease in ocean revenue to $9.9bn for the first quarter. Profitability was significantly lower compared to Q1 2022.

The carrier reports that its first quarter was in line with expectations. Continued destocking and easing of congestion resulted in lower volumes across all segments. Revenue declined by 26% to $14.2bn from $19.3bn. Ebitda decreased to $4.0bn from $9.1bn, and Ebit to $2.3bn from $7.3bn. The full-year guidance remains unchanged, with Q1 expected to be the strongest quarter of the year.

Its Logistics & Services revenue grew 21% to $3.5bn driven by the consolidation of acquisitions.

“Q1 was marked by continued destocking in Europe and especially North America. While it is difficult to predict the exact timing, Maersk expects volumes to gradually pick up in the second half of the year,” says CEO Vincent Clerc.

Based on the expectation that inventory correction will be complete by the end of H1, the carrier predicts a more balanced demand environment. With 2023 global GDP growth likely to remain muted, the global ocean container market is likely to grow in the range of -2.5% to +0.5%, according to Maersk. Ocean expects to grow in line with the market.

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