Maersk CEO warns of slump in Q2 volumes

Abiola Seun

AP Møller – Maersk’s chief executive officer, Søren Skou, has forecast a huge Q2 volumes plunge in the company’s announcement of the first-quarter results.

The Danish liner company has cancelled numerous sailings with its 2M Alliance partner, MSC, as a result of the second-quarter decline, with more cancellations announced this week as demand drops steeply.

“As global demand continues to be significantly affected, we expect volumes in Q2 to decrease across all businesses, possibly by as much as 20-25%,” he stated.

The Maersk CEO unveiled the company’s Q1 financial performance, which saw earnings before interest, tax, depreciation and amortisation (EBITDA) improved 23% to US$1.5 billion compared to Q1 last year while revenue increased slightly to US$9.6 billion.

However, these results pertain to a period before the Covid-19 infection took hold in regions beyond Asia.

Even so Skou said, “The strong results were made during a quarter with sharp fuel cost increases derived from the industry’s switch to low-sulphur fuel and on the backdrop of a contraction in global trade due to lockdowns in most regions.”

In addition, Maersk also reported a drop in the fleet it operates, driven by a decrease in its chartered vessels. The Danish company has 390 chartered ships in first quarter of 2020, a decrease of eleven vessels compared to the last quarter of 2019, while the number of its own container ships remains stable.

Maersk said that it is proceeding with its supply chain end-to-end strategy referring to the acquisition of Performance Team, a US-based warehouse and distribution company, and a cold store construction in St. Petersburg, Russia, that have been completed during the quarter.

Furthermore, the Copenhagen-based carrier highlighted the spike in its usage of digital services, pointing out that the Maersk app experienced an 86% increase.

“Looking into Q2 2020, visibility remains low as a result of the Covid-19 pandemic,” said Skou. “As we proactively respond to lower demands and show progress in our transformation and financial performance, we are strongly positioned to weather the storm,” he added.

Responding to the lower demand caused by the Covid-19 impact, Maersk Line continues to implement additional blank sailings across the globe.