SIMIC

DANISH shipping giant Maersk's first quarter net profit fell 68 per cent year on year to US$2.3 billion, drawn on revenues of $14.2 billion, which fell 26 per cent.

Maersk CEO Vincent Clerc said there was no firm evidence of a demand recovery, and that the next quarters would be "the reality" of a challenging year.



"If you are very exposed to the spot market, and very exposed to east-west trades, you may actually be in loss-making territory," he said.



First quarter freight revenue from Maersk's ocean sector slumped 37 per cent on the previous year, to $9.9 billion, as volume fell from six million TEU to 5.4 million TEU for an average rate of $1,436 per TEU versus $2,276.



Contracted volumes accounted for 67 per cent of its liner business, and Maersk says it now has 75 per cent of its annual contract customers re-signed - albeit at lower rates. It said: "Average contract rates for 2023 continue to trend towards spot rates."



Mr Clerc confirmed that the line still had some 3.6 million TEU of business signed-up with its top 200 customers on multi-year contracts, explaining that they were index-linked and currently higher than the market, but would soon even out.



"They were also lower in 2021 and 2022, on what we otherwise would have achieved, and now it's a bit the other way, but they will converge over time with the rest of the contracts," said Mr Clerc.



On future strategy, post 2M Alliance, Mr Clerc made it clear that Maersk would not seek to join another vessel-sharing scheme, explaining that the scale benefits had "basically, gone away".



And Maersk's terminals also suffered in the quarter, as volumes fell and storage revenue declined. Throughput decreased 9.5 per cent, to 2.8 million TEU, and revenue per move fell 14.5 per cent, to $309. Total revenue was $876 million, compared with $1.1 billion the year before, for an EBITA of $291 million against $456 million in last year's corresponding quarter.