The shares of A.P. Moller-Maersk, a global shipping leader, plummet by nearly 20% after projecting a dramatic drop in 2024 profits, forecasting underlying EBITDA to fall to between $1 billion and $6 billion, down sharply from $9.8 billion in the previous year. This bleak outlook is attributed to an oversupply of freight capacity entering the market, coupled with subdued global trade.
Despite a recent surge in shipping rates due to detours around Red Sea disruptions, Maersk warns this uptick is unsustainable with new vessel deliveries set to outstrip demand growth. The company anticipates global container volume growth of only 2.5%-4.5% in 2024, overshadowed by an 11% increase in shipping capacity.
Maersk's CEO Vincent Clerc, cited by WSJ, points out the significant challenges from an oversupply in shipping capacity that is expected to impact freight rates and the company's financial outlook substantially. Clerc draws a distinction between the current market conditions and the pandemic-induced supply chain disruptions that previously bolstered the company's profits, underscoring the unique challenges the shipping industry currently faces.
