Maersk reports volume growth and improved EBIT margin in Q2 2024

In a press release, Maersk said its results were driven by “increased profitability in Ocean, solid growth in Logistics & Services and excellent performance in Terminals”.

Readers may also recall that last week, due to the prolonging of the crisis in the Red Sea and continued market demand, Maersk upgraded its guidance for 2024.

Commenting on the results, Vincent Clerc, CEO of Maersk, said:

“Our results this quarter confirm that performance in all our businesses is trending in the right direction. Market demand has been strong, and as we have all seen, the situation in the Red Sea remains entrenched, which leads to continued pressure on global supply chains. These conditions are now expected to continue for the remainder of the year. We have invested in additional equipment in all our businesses to adapt to the situation and continue supporting our customers through the disruptions. As we look ahead, our focus remains on leveraging organic growth while exploring opportunities for value-accretive acquisitions particularly in Logistics. We will maintain tight cost control and high asset utilisation, and further execute on our fleet renewal program.”

Ocean

Maersk reported robust volume growth and elevated freight rates in its Ocean segment, particularly driven by Asian exports, indicating heightened supply chain pressure. The company also noted that ongoing issues in the Red Sea and the rerouting south of the Cape of Good Hope contributed to increased operating costs.

Maersk’s ocean segment nonetheless achieved positive profitability, which, although lower than the same quarter last year, showed significant improvement compared to Q1 2024 and Q4 2023.

Logistics & Services

In its Logistics & Services segment, Maersk reported 7% growth compared to the previous year, with increased volumes across all product families more than compensating for lower rates.

The company also highlighted that profitability improved both sequentially and year on year, benefiting from enhanced asset utilisation, effective cost control, and progress on initiatives aimed at addressing customer implementation challenges in the ground freight business in North America.

Terminals

Maersk’s Terminals segment recorded volume growth as well, especially in North America. The company saw a significant increase in revenue per move due to higher tariffs and increased storage fees, while costs per move rose slightly.

The company states that effective cost management and strong revenue growth bolstered profitability, resulting in one of the highest EBITDA levels ever achieved.

2024 outlook

When it comes to the second half of the year, Maersk says it now expects global container market growth to be between 4-6%, and to grow in line with the market compared to the previous expectations of towards the upper end of 2.5-4.5%.

In addition, Maersk now expects CAPEX to be between USD 10.0-11.0bn for 2024-2025 (previously USD 9.0-10.0bn) due to continuous fleet renewal.

However, Maersk also stressed that its 2024 performance depends on several factors “subject to uncertainties related to the given uncertain macroeconomic conditions”.

These include bunker fuel prices and freight rates, with the changes and effect on EBIT illustrated in the table below:

Other insights

Offering his analysis of Maersk’s results via LinkedIn, Vespucci Maritime CEO Lars Jensen highlighted the company’s loaded container volume, loaded freight rate, rate development, and supply chain management volume, among other things.

Loaded container volume

“Loaded container volume was up 6.7% year-on-year,” noted Jensen, who went on to say that for comparison, Container Trades Statistics (CTS) data for the global market shows Q2 being up 6.1%. The Vespucci Maritime CEO thus concluded that this was an indication of a slight gain in market share.

“This covers a spread in Maersk volume where East-West as well as intra-regional trades grew around 9% but North-South trades only grew 2%. For comparison CMA CGM’s container volumes were up 6.8%, OOCL was up 0.9% and ONE was up 11.2%,” added Jensen.

Loaded freight rate

In terms of loaded freight rate, Jensen noted a year-on-year rise of 2.3% year-on-year, lower than the equivalent CTS global rate index figure of 9.2%. Jensen nonetheless also pointed out that while carrier revenue tends to be recognised on completion of the journey, CTS measures at time of loading.

Jensen then offered further comparisons with the two aforementioned shipping lines:

“If we in lieu of Q2 use CTS data for Mar-May, then the rate of development in the global market was a negative -2.7%. For comparison, CMA CGM’s revenue per TEU was down -7.1%, OOCL was up +13.4%,” stated Jensen.

Rate development

Finally, Jensen described Maersk’s rate development in Q2 2024 as “not evenly spread”. Elaborating on this, the shipping expert observed that while East-West rates are up 12%, North-South rates are down -3.2% and Intra-regional rates are also down -14.2%.

This may surprise some, an anticipating this surprise among his followers, Jensen added:

“For anyone being puzzled about the seemingly low rate development, keep in mind that Q2 2023 was at a point where rates were still in the process of coming down from the extreme highs. Also keep in mind that the CTS index is more comprehensive and includes both post and contract as well as all different tradelanes – as opposed to the extreme spot rate developments seen mainly in major deep-sea trades over the past 3 months.”