Maersk warns oversupply to hit profits and plays down Red Sea boost

REUTERS :

Maersk (MAERSKb.CO) warned on Thursday that container shipping overcapacity would hit profits more than expected this year and that it didn’t see a major boost from the jump in freight rates due to Red Sea disruptions, hammering its shares.
The warning, which also led the Danish shipping giant to suspend its share buyback programme, is in stark contrast with investors’ recent optimism about the sector.
Container shippers have been among the best-performing stocks in Europe this year as the re-routing of vessels following attacks on shipping by Houthi militants in the Red Sea – a major trade route – has boosted freight rates.
Maersk, like other shippers, has been diverting vessels on a longer route around Africa, and some analysts had expected extended journey times and higher freight rates would outweigh a big increase in new container ships joining the market.
However, Maersk CEO Vincent Clerc told reporters that the Red Sea crisis did not match the scale of disruption caused by the pandemic, when freight rates and shippers’ profits were bolstered by multiple shocks, including lockdowns, changing consumer behaviour and bottlenecks.
“In this case, it’s only a longer transit time,” he said.