Container shipping has become so profitable in 2024 that Maersk is raising its full-year earnings guidance for the third time, increasing its expected income by $2 billion.
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The ocean carrier now expects underlying earnings before interest, tax, depreciation and amortization (EBITDA) to be between $9 billion to $11 billion, up from a previous forecast of $7 billion to $9 billion.
That range was originally $1 billion to $6 billion when it was first announced in February, before it was narrowed down to a $4 billion to $6 billion range.
Maersk is also expecting double the free cash flow it initially anticipated at least $2 billion, up from the previous $1 billion estimate.
Given the multiple guidance raises from both Maersk and future alliance partner Hapag-Lloyd , the second quarter is expected to bring in another windfall on par with the industry’s $5.4 billion net profit in the prior quarter.
The Danish company didn’t just raise its own profit outlook. The container shipping giant said global container market volume growth for 2024 has been revised up to 4 percent to 6 percent, in a positive sign for global trade for the remainder of the year. The previous growth projection was toward the upper end of 2.5 percent to 4.5 percent.
Maersk said the changes were “due to the continued supply chain disruption caused by the situation in the Red Sea, which is now expected to continue at least until the end of 2024, coupled with robust container market demand.”
Like many of its container shipping contemporaries, Maersk has largely avoided sailing the Red Sea due to the ongoing Houthi attacks on commercial vessels near the area. Instead, these ships have been diverted around southern Africa’s Cape of Good Hope, tacking on 10-to-14 days of extra sailing time for cargo leaving Asia to both Europe and the U.S. East Coast.
The Red Sea diversions have resulted in a cutting of capacity out on the ocean—particularly on the Asia-to-Europe trade lane—with Maersk saying second-quarter capacity on that route was reduced by 20 percent. The capacity issue has been exacerbated by port bottlenecks, where congestion had major hubs like Shanghai, Ningbo and Singapore have thrown ships off schedule and manufactured a shortage of empty containers.
Schedule reliability has clearly been impacted by the port congestion . In June, global schedule reliability dropped by 1.2 percentage points month over month to 54.4 percent, according to data from Sea-Intelligence. This has kept in line with the trends seen so far in 2024, where global schedule reliability has largely been within 50 percent and 55 percent. On a year-over-year level, schedule reliability was 9.8 percentage points lower.
The average delay for late vessel arrivals has also deteriorated, the maritime trade advisory service said, increasing by 0.04 days month over month to 5.19 days. Compared to last year, the vessels are 0.82 days later than the 4.37-day arrivals.
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The fallout from the diversions also has been felt in container prices, which seen two major spikes since the end of last year—once in December and January and then again from the start of May to July 4.
However, ocean spot freight rates are finally starting to level out after the second early summer spike. The Drewry World Container Index (WCI) has decreased for the second week in a row as of Thursday, with rates falling 1 percent to $5,736 per 40-foot container. In that two-week span, rates have fallen 3.3 percent from their peak at $5,937.
The raise comes as Maersk released preliminary numbers for its second quarter. The company reported an unaudited revenue of $12.8 billion and underlying EBITDA of $2.1 billion. These numbers are both down from the prior year’s figures of $13 billion in revenue and $2.9 billion in EBITDA.
Although Maersk has bolstered its full-year expectations, the company acknowledged the uncertainty of the global supply chain.
“Trading conditions remain subject to higher-than-normal volatility given the unpredictability of the Red Sea situation and the lack of clarity of supply and demand in Q4,” said Maersk.
Maersk initially thought the disruption from the Red Sea would only last a few months, but CEO Vincent Clerc said last month that the disruptions were expected to linger into the third quarter at minimum.
Most industry stakeholders seem to believe that the Houthi attacks are unlikely to stop this year, forcing container vessels to continue rerouting their ships into 2025.
Clerc warned in July that Maersk may not be able to fulfill all demand in the coming months, as any ship that can sail has been redeployed to plug holes throughout the network.
A.P. Moller-Maersk will publish its full second quarter interim results on Aug. 7.
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