Boom ends for shipping fleets

SHIPPING companies face a “radically changed” world as the pandemic shopping boom comes to an end, the boss of AP Møller-maersk has warned.

Vincent Clerc, chief executive of the Danish giant, yesterday blamed a challenging market for a drop in profits, as businesses wound down stockpiles they had built over the past three years.

He also warned that a fleet of new cargo ships due to come into service could push shipping prices down even further, adding that the outlook was uncertain “for the remainder of the year”. Mr Clerc said: “We delivered a solid financial performance in a challenging market with lower demand caused by a continued destocking.

“As we adjust to a radically changed business environment, we continue to support our customers in addressing their supply chain challenges.”

In the early months of the pandemic, shipping companies enjoyed a huge boom in demand as online shopping surged and retailers piled products high in warehouses.

Shipping prices then surged even higher as economies reopened and the sudden burst of demand snarled up supply chains worldwide, with companies rushing to insulate themselves from delays by ordering goods in bulk. How- ever, after reaching $11,109 (£8,830) per container in September 2021, spot prices have since tumbled to just under $1,600 per container, according to the Freightos Baltic Index.

The fall has been reflected in shipping company profits. Maersk, the world’s second-biggest container ship operator, yesterday reported a pre-tax profit of $2.5bn for the first three months of 2023, down from $7bn a year earlier. That was after sales tumbled from $19.3bn to $14.2bn. Rival MSC responded to the pandemic demand by increasing the size of its fleet, while Maersk has kept ship numbers steady.