Maersk books record profit in Q1 on surging freight demand

Copenhagen, Denmark - Danish shipping giant AP Moller-Maersk said on Wednesday that it booked record earnings in the first quarter on the back of surging demand during the coronavirus pandemic.

For the first three months of the year, the world’s biggest freight company posted net profit of US$2.7bn. That is almost as much as the group made in the full-year 2020 and a 13fold increase over the figure for the first quarter of 2020, Maersk said in a statement.

Sales, which were already announced at the end of April when the group raised its 2021 fullyear targets, rose by 30 per cent to US$12.4bn.

“Strong demand led to bottlenecks, as well as lack of capacity and equipment, which drove up freight rates to record high levels,” said CEO Soren Skou. Maersk said it would launch a new US$5bn share buy-back programme over the next two years.

As a result of the pandemic, demand for shipping has surged since mid-2020 and especially since the end of the year, in particular from Asia to the US and Europe.

Shipping companies and analysts attribute the rise to consumers purchasing more manufactured products, instead of spending their money on trips and restaurants and other experiences. Additionally, many companies are still in the process of restocking after reducing their orders in the first months of the pandemic. On some routes, primarily those from Asia, some container rates have been tripled or even quadrupled.

In March, the situation was aggravated by the six-day blockage of the Suez canal, which held up an estimated US$9.6bn worth of cargo between Asia and Europe each day.