Global Container Shipping Market Faces Overcapacity and Profit Impact

Maersk CEO Vincent Clerc warned at the group’s annual general meeting that the global container shipping market is facing overcapacity in the coming years. He stated that tariffs paid by customers have fallen to unsustainable levels, impacting profits. German rival Hapag-Lloyd also acknowledged the global oversupply of container ships and the Red Sea crisis, leading to an 83% drop in net profit and the need to cut costs and adjust sailings and ports in 2024.
Container rates saw a brief spike in December and early January due to ship attacks in the Red Sea, but have since faded as available capacity still exceeds demand. Maersk highlighted the increase in industry capacity by 9% in 2023, with further expected growth in 2024 and 2025. Clerc emphasized the need for demand growth, slow steaming, and ship recycling to offset the excess capacity and restore healthy earnings levels.
Maersk, which announced 10,000 job cuts last year, continues to focus on cost control measures. Despite the challenges, the company’s dividend policy of paying shareholders 30% to 50% of underlying net profit remains in place. The industry outlook indicates a need for strategic adjustments to address overcapacity and ensure sustainable profitability in the container shipping market.

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