Industry 'bellwether' Maersk reports best-ever quarter in its 117-year history

Thu 6 May 2021
Posted by: Noelle McElhatton
Trade News

Global shipping and logistics giant Maersk has recorded the best quarter in its history, citing “extraordinary market conditions” around delivery of pandemic medical supplies and consumer goods caused by a spike in online buying.  

The Danish firm, which the FT has called the bellwether of international trade, reported a net profit of $2.7bn for the first three months of 2021, compared with $209m for Q1 2020. 

Group revenue was up 30%, to $12.4bn, driven by a 35% increase in freight rates on its liner trades to an average of $1,331 per teu, on a volume increase of 5.7%, to 6.4m teu.

The A. P. Moller - Maersk company was founded in 1904 by A.P. Møller together with his father Peter Mærsk Mølle.

Contract focus

Maersk’s profit for the period could have been even higher if it had focused on the lucrative spot market, according to the Loadstar.

However, it is moving towards longer term contracts. “We want to be less dependent on the short-term market,” said chief executive Soren Skou.

Maersk has finalised more than 80% of its long-term contracts and expects to increase its volume from this business by around 20%, to 12m teu, across its liner services. It has signed one million multi-year deals with its 500 largest customers.

Acquisitions trail

Maersk’s Logistics & Services division saw turnover jump 42%, to $2bn, mainly driven by organic growth, but also by growth from its acquisitions including that of KGH Customs Service, which it bought last year.

It has a “war chest” for further possible acquisitions to boost its land-based logistics business.

However, in a warning to global traders, and echoing opinion expressed at IOE&IT chairman Terry Scuoler’s recent Santander conference panel discussion, the firm predicts further global supply chain logjams and increasing freight rates, the FT reports

A combination of markets reopening after Covid-19, government stimulus, and the Suez Canal blockage disrupting global trade, is to blame, said Skou.

At one point, Maersk had 50 ships waiting to pass through the Suez Canal. Skou pointed to ships waiting up to 16 days to dock at Los Angeles due to capacity issues.

“Because of all the delays around the world, basically every ship is deployed. So, if demand goes up, there are no more ships to bring in,” he said.

The world reopening

Skou called 2021 the year “when the world reopens”, leading to high demand. According to Maritime Professional, Maersk, which handles about one in five containers shipped worldwide, has set money aside to buy more containers but has no plans to order more ships. It lifted its forecast for global container demand growth to 5%-7% from 3%-5%. Container demand contracted 1.8% last year.

Supply chain bottlenecks have also benefitted other shippers, reports Bloomberg. Deutsche Post AG (owner of courier DHL) and US delivery giant United Parcel Service have both delivered record earnings recently.

Tight freight-forwarding markets have forced Deutsche Post customers to send packages by more expensive express delivery. Its express unit achieved a 17.5% operating profit margin in the January to March period.

UPS’ consolidated revenue for Q1 was reported up 27% at $22.9bn, driving annual earnings per share up 141%, Logistics Management reports.