Global shipping doyen and Denmark’s largest company Maersk has warned of further port congestions, especially in Asia and the Middle East, due to ongoing pirate attacks in the Red Sea.
Updating shareholders on Monday, Maersk warned of “longer Red Sea disruption” caused by Houthi rebel attacks in the crucial global shipping route.
But while this has led to increased network costs, bunker consumption and container handling costs, the substantial rise in freight rates has been an undeniable boost to Maersk’s bottom line.
The average freight rate that Maersk charges shot up 23% sequentially to US$2,368 per forty-foot equivalent unit (FFE). FFE is a standardised unit used to quantify cargo capacity in container shipping.
As a result of these elevated freight costs, Maersk raised its near-term earnings forecast, with underlying EBITDA guidance for the current financial year tightened to $4-$6 billion from a looser range of $1-6 billion previously.
Analysts weigh in
Bloomberg’s transport analyst Lee Klaskow said that earnings expectations “will need to move higher for Maersk and the broader liner market amid a surge in freight rates from increased port congestion and an earlier start to peak demand from the dislocation created by the Red Sea crisis”.
“Strong pricing will remain as long as ships can’t safely traverse the Suez Canal,” added Klaskow.
Followin the results, analysts at Stifel have set an EBITDA guidance range of $7-9 billion, implying a conservative internal forecast from Maersk.