Maersk sees drop in global container demand this year as supply chains hit

Containers from shipping giant Maersk piled up in the freight yard of Berlin’s Behala west harbour in February. (AFP)
Short Url
Updated 14 May 2020

Maersk sees drop in global container demand this year as supply chains hit

COPENHAGEN: Shipping group A.P. Moller-Maersk on Wednesday warned of a sharp drop in global container volumes due to the coronavirus pandemic, sending its shares down sharply.

The coronavirus epidemic has thrown the global container shipping trade off balance as global supply chains have been upended and businesses and factory activity in China and later across the world were disrupted.

Maersk, which also reported a 23 percent rise in first-quarter core profits, now expects global container demand to contract this year, after previously forecasting growth of 1-3 percent.

“As global demand continues to be significantly affected, we expect volumes in the second quarter to decrease across all businesses, possibly by as much as 20-25 percent,” Chief Executive Soren Skou said in a statement.

Maersk shares were more than 5 percent lower in early trade. The shares have risen by a third since March when they reached their lowest level in more 10 years.

Maersk said that it had canceled more than 90 sailings, or 3.5 percent of total shipping capacity, in the first quarter to deal with the slowdown in trade and keep freight rates from falling.

It expects to cancel some 140 sailings in the April to June period.

Maersk reported earnings before interest, tax, depreciation and amortization (EBITDA) at $1.52 billion, slightly above company guidance provided in March when it suspended full-year guidance due to uncertainty caused by the coronavirus pandemic.

The world’s biggest container shipping company reported revenue of $9.57 billion versus the $9.59 billion forecast by 16 analysts in a poll compiled by Maersk. 

10 things you need to know on Tadawul today

Updated 27 min 30 sec ago

10 things you need to know on Tadawul today

Here are a few things you need to know as Saudi stocks start trading on Wednesday.

1) Saudi Aramco customers are unaffected by the terrorist attack at a petroleum products distribution plant in the north of Jeddah, a company official said.

2) The Saudi Arabian Monetary Authority (SAMA) imposed penalties on 30 financial institutions due to violations of “responsible finance principles” for individuals.

3) Saudi Arabian Amiantit Co. signed two agreements to sell its stakes in Moroccan units, generating an accounting profit of SAR 14.16 million ($3.89 million).

4) Saudi Arabia moved beyond the concept of relative food security to achieve self-sufficiency in many sectors such as milk and poultry, according to Almarai Co.’s vice president of corporate affairs Faisal Marzouq Al-Fahadi.

5) Al-Khaleej Training and Education Co. signed a binding 30-day memorandum of understanding with the shareholders of Al-Raqi National Schools Co. to acquire 60% of the latter at SAR 12.82 million.

6) Saudi Reinsurance Company (Saudi Re) signed reinsurance contracts with Probitas Corporate Capital Ltd. with estimated gross written premiums of SAR 177 million.

7) Sadara Basic Services Co. said its parent company, Sadara Chemical Co. (Sadara), met the conditions specified by lenders under the Sadara project financing documents to achieve the project completion date.

8) Abdullah Al Othaim Markets Co. announced the opening of a new store in Al-Kharj, bringing the total number of branches across Saudi Arabia to 248.

9) Arabian Pipes Co. shareholders approved amending some of the company’s bylaws during the extraordinary general meeting.

10) Oil prices rose on Wednesday morning. Brent crude edged up 62 cents to $48.48/bbl, while WTI crude gained 52 cents to $45.43/bbl.

Powered by Argaam