Maersk Warns of 25% Drop In Shipping Due To Coronavirus Impact

Maersk Warns of 25% Drop In Shipping Due To Coronavirus Impact

maersk warns 25% drop in shipping

Last updated on May 18th, 2020 at 06:17 pm

Denmark’s AP Moller Maersk, the world’s biggest shipping company, said that ” it expects its transport volumes to drop by up to 25 percent in the second quarter as the world economy slides toward recession.”

This statement has taken the container shipping industry by storm as various stakeholder are now fearing financial losses and jobs scarcity.

CEO Soeren Skou said that the Maersk group was “strongly positioned to weather the storm” but that the COVID-19 crisis had had “a significant impact” on its activities.

Related: Tonnage Slips at Port Houston Amid Pandemic

Today (May 13) Maersk group presented its first quarter results. It booked a profit of USD 209 million, up from a loss of USD 656 million in the same period last year. The strong results were made during a quarter with sharp fuel costs increases derived from the industry’s switch to low sulphur fuel and on the backdrop of a contraction in global trade due to lockdowns in most regions.

The Maersk group has suspended the full year guidance for 2020, as the COVID-19 pandemic continues to lead to material uncertainty in the coming quarters. 

Maersk Group’s Views About COVID-19 Impact on The Shipping Industry

The impact and span of the COVID-19 pandemic is difficult to predict, and business recovery is dependent on the time it takes to contain the spread and reopen the economies globally, as well as on the effectiveness of the fiscal stimuli from governments. The long-term effects will also depend on effective medicines and vaccines being developed.

Also Read: Seafarers- The Forgotten Corona Warriors?

Volume Outlook

Maersk Line predicts second-quarter container volumes will fall 20%-25% year-on-year basis.



 

Maersk Line has “blanked” (cancelled) more than 90 sailings in the first quarter so far to reduce variable costs. Its loaded volumes fell from 3.15 million forty-foot equivalent units (FEU) in the first quarter of 2019 to 3.048 million FEU in the most recent period, a decline of 3.5% in deployed capacity. Maersk line is expected to blank about 140 sailings in the second quarter.

Freight Rate Expectations

Maersk reported first-quarter rates of $1,999 per FEU, up 5.7% year-on-year. In general, global freight rates are up in the second quarter. Rates are being propped up despite plunging demand because carriers have reduced capacity via blank sailings. Though any specific predictions were not made by the Maersk group.

Reference: A.P. Moller Maersk

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