Maersk’s Q2 2024 profits drop 44% despite increased freight rates

Published August 13, 2024

DENMARK – Maersk, a global shipping and logistics company, reported a sharp 44% decline in net profit, dropping to USD 833 million for the second quarter of 2024.

Despite a 7% increase in loaded volume and a 2.3% rise in average loaded freight rates, total revenue fell slightly by 2%, totaling USD 12.8 billion compared to USD 13 billion in the same quarter last year.

The company cited increased operational costs due to ongoing disruptions in the Red Sea and the necessity to reroute through the Cape of Good Hope.

Vincent Clerc, CEO of Maersk, highlighted these challenges: “Ocean saw strong volume growth and higher freight rates. However, the situation in the Red Sea continues to pressure global supply chains.”

While profitability was better than in earlier quarters of 2024, it remained below the levels achieved in the same quarter of the previous year.

Despite these financial pressures, Maersk’s logistics and services divisions grew by 7% compared to the previous year. The increase in volumes across various products helped mitigate the impact of lower rates.

Terminals, particularly in North America, also reported strong performance, contributing to overall revenue. “Effective cost management and robust revenue growth supported profitability,” the company stated. Revenue per move increased due to higher tariffs and storage fees, though costs per move rose slightly.

Fleet renewal and sustainability initiatives

Maersk is moving forward with its fleet renewal program by ordering 800,000 TEUs of dual-fuel vessels. This order is part of a broader strategy to enhance fleet competitiveness and reduce carbon emissions.

Rabab Boulos, Chief Operating Officer at Maersk, commented, “Our fleet renewal program is crucial for maintaining our competitive edge and reducing emissions.”

The new vessels, set to be delivered between 2026 and 2030, will feature dual-fuel engines capable of operating on both methanol and liquified gas. This initiative is a significant step towards Maersk’s goal of decarbonizing its operations.

Ahmed Hassan, Head of Asset Strategy & Strategic Partnerships at Maersk, added, “These orders will not add to the overall capacity. Instead, each new vessel will replace an older one that has reached the end of its operational life, maintaining our fleet size at around 4.3 million TEU.”

The company is also working on securing agreements for liquified bio-methane to ensure that the new dual-fuel vessels meet greenhouse gas reduction targets.

Maersk revised its 2024 financial outlook on August 1, now expecting EBIT to be between $3-5 billion, an increase from the previous forecast of USD 1-3 billion.

The company is focusing on investing in new equipment and exploring growth opportunities, particularly in logistics, while maintaining tight cost control.

“Market demand has been strong,” Clerc noted. “We are investing in additional equipment to adapt to current challenges and continue supporting our customers.”