World's largest shipping company says demand will decline for rest of 2020

Reuters‘Global demand growth for containers is overall still expected to contract in 2020,’ Maersk CEO Søren Skou told investors on Wednesday.
  • The CEO of shipping giant Maersk is projecting that demand for containers will decline globally in 2020.
  • This expectation comes after Maersk beat its own Q2 forecast of operating profit.
  • Maersk, which is seen as proxy for global trade, also reinstated its full-year guidance to be roughly $US6 billion to $US7 billion, up from $US5.5 billion earlier in 2020.
  • Visit Business Insider’s homepage for more stories.

The coronavirus pandemic has triggered a decrease in demand for products globally in 2020, and Maersk, the world’s largest shipping firm, is cautioning the freight transportation industry that the trend is likely to continue for the rest of the year.

“Global demand growth for containers is overall still expected to contract in 2020,” CEO Søren Skou said in a Wednesday earnings call.

This comes even as Maersk topped its own forecast after “post[ing] an increase in operating profit of 25% to $US1.7 billion” in second quarter EBITDA (earnings before interest, tax, depreciation and amortization).

Maersk previously announced in June that it was projecting an operating profit of $US1.5 billion, Markets Insider reported on Wednesday morning.

“All through the pandemic, our business has been negatively impacted by lower demand,” Skou said on the call. “Our single biggest challenge has been the difficulties with getting our seafarers relieved when their tours were up due to travel restrictions, closed borders and lack of flights. And we continue to battle this problem, but we have started to make some real progress.” As of earlier this month, an estimated 300,000 seafarers were stuck at sea, unable to travel home due to various coronavirus-related rules.

Maersk, which is sometimes seen as a proxy for international trade, now has “an EBITDA expectation of $US6 billion to $US7 billion” for this year, per its earnings report.

In comparison, Maersk had an initial guidance of $US5.5 billion earlier in 2020.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.