Maersk's Q3 Profit Soars Despite Modest Increase in Container Volume

Source: Maersk

Rate growth more than offset modest increases in container volumes, helping A.P. Moller-Maersk boost revenue and profit in the third quarter.

Ocean revenue rose to $15.8 billion in the quarter ended Sept. 30, from $12.1 billion a year earlier, according to parent company Maersk's financial report in Copenhagen, Denmark. Earnings before interest and tax (EBIT) came in at $2.8 billion, reversing a $27 million loss due to Houthi rebel attacks in the Red Sea.

Cargo was also diverted to US West Coast ports to avoid an East Coast dockworkers strike that temporarily shut down container handling in early October.

The attacks prompted shipping lines to divert vessels to other routes, including a longer journey around Africa's Cape of Good Hope instead of the Red Sea. Maersk said this led to a 14% year-on-year increase in fuel consumption and a 6.7% increase in overall operating costs. Those costs were passed on to customers as average freight rates rose 54%, peaking early in the third quarter.

However, the world's second-largest container line said container volumes were up just 0.3% from the third quarter of 2023, below the expected global growth of 4% to 6% year-on-year.

“[Maersk’s] average operated fleet has grown 2.3% compared to a year ago – and given how the Red Sea crisis has caused the need to go much longer distances, this is insufficient growth to match the requirement to maintain weekly capacity, and is likely a key reason why their marketshare in loaded volumes has declined,” Lars Andersen, CEO of consultancy Vespucci Maritime, said on LinkedIn.

Maersk said volumes fell 3.1% on its east-west trades but rose 7.6% on its intra-regional services.

The EBIT margin for the shipping business over the past 12 months was 6.4%, above the company’s full-year 2024 target of 6%. Maersk raised its earnings before interest, taxes, depreciation and amortization (EBITDA) forecast to $11 billion to $11.5 billion, up from $9 billion to $11 billion, and EBIT to $5.2 billion to $5.7 billion, up from $3 billion to $5 billion. Free cash flow is expected to reach $3 billion, up from $2 billion.

The Logistics & Services segment saw quarterly revenue rise 11%, driven by volume growth across most services. The company opened its largest logistics hub in the Middle East in Jeddah, Saudi Arabia, and added a new Boeing 777F to its fleet. Trailing-12-month growth was 2%, below the company’s target of 10%.

Supply chain volumes increased 21% and First Mile volumes increased 9.6%, while air freight declined 2.4% year-on-year.

The Ports segment recorded record revenues and volumes, including a 20% increase in cargo volumes in Los Angeles and Port Elizabeth, New Jersey. EBITDA reached its highest level since Q1 2022 at $424 million. The company revised its return on invested capital outlook for the segment to 13% from 9% for 2024.

Overall EBIT margin reached 21% and EBITDA margin reached 30%.

Read more:

• Port of Melbourne sees container volumes increase in September
• Sea-Intelligence: Global Schedule Reliability Drops to 51.4% in September
• International shipping and logistics market update - Week 44/2024
• Red Sea Crisis Brings ‘Vessel Bunching’ to Pandemic Peak
• ILA union at US East and Gulf Coast ports to resume contract talks in November
• Suez and Panama Canal Disruptions Threaten Global Trade and Development: UNCTAD
• Cargo volumes soar at Singapore Changi Airport
• Maersk raises 2024 profit forecast

Source: Phaata.com (via FreightWaves)

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