Flush With Cash, Maersk Expects To Repeat Record $24bn in 2022


In line with its updated guidance for 2021 issued last month the company reported an EBITDA of $24bn for 2021, nearly three times the $8.2bn EBITDA Maersk reported for 2020. Maersk’s revenues were up 55% to $61.8bn as supply chain disruption drove container freight rates to record highs last year, reports Seatrade Maritime News.

Record high growth 

“Exceptional market conditions led to record-high growth and profitability in AP Moller – Maersk, however it also led to supply chain disruptions and severe challenges for our customers,” commented Soren Skou, CEO of AP Moller – Maersk.

The company reported an EBIT of $17.96bn for its core ocean freight business in 2021 compared to $3.2bn in the previous year. EBIT margin stood at 37.2% for 2021 against 11% in the previous year.

The year past year has seen container freight rates soaring to previously unimaginable levels and Maersk has moved to lock-in rates on long-term contracts, which it has prioritised over spot shipments. Long term contracts now represent 65% of the line’s volumes compared to 50% a year earlier.

Maersk’s Statement

“The average loaded freight rate increased by 66% to $3,318 per feu ($2,000 per feu), primarily driven by long-term contracts renewing at significant higher rates, as well as short-term rates driven by strong demand combined with bottlenecks and congestions driving rate increases,” Maersk said in its annual report.

How the billions are spent?

Maersk is continuing to plow some of its huge profits into expanding its logistics and supply chain offerings. Acquisitions in 2021 included Visible Supply Chain Management, B2C Europe, HUUB and the intention to acquire LF Logistics. This strategy is continuing with Maersk announcing the $1.68bn purchase of Pilot Freight Services at the same time as its annual financial results.

We spent tremendous efforts in mitigating bottlenecks by expanding capacity across ocean, improving productivity in terminals and growing our global logistics footprint,” Skou said.

Acquisition of an American logistics provider

The Danish transport giant is paying $1.68bn for Pilot Freight Services, a US-based first, middle and last mile as well as border crossing solutions provider, specialising in the big and bulky freight segment in North America for B2C and B2B distribution models. Maersk is buying Pilot from ATL Partners, a sector-focused private equity firm in New York and British Columbia Investment Management Corporation (BCI), one of the largest institutional investors in Canada.

“With the intended acquisition of Pilot, Maersk will extend its integrated logistics offering deeper into the supply chain of its customers,” Maersk stated in a release, saying Pilot would complement earlier acquisitions already made to provide integrated logistics solutions in North America, especially with Performance Team, a B2B warehousing and distribution firm and Visible SCM, an e-commerce warehousing and parcel distribution company.

“Pilot will be adding specific new services within the fast growing big and bulky e-commerce segment, thus increasing cross-selling opportunities,” Maersk explained.

About Pilot

Pilot operates a North American facilities-based transportation network of 87 stations and hubs through which freight is transported and distributed to end customers. The company uses mainly third party providers of trucking and has access to controlled capacity. Pilot bought American Linehaul Corporation last year, giving it expertise in middle mile, LTL expedited capabilities.

The expected forcast

Maersk said it expects the current market situation to continue into Q2 2022 with a “normalisation” to occur early in the second half of the year. The company is forecasting an underlying EBITDA of $24bn for the full year 2022, just like 2021’s final result.

“Ocean is expected to grow in line with global container demand, which is expected to grow 2-4 pct. in 2022, subject to high uncertainties related to the current congestion, network disruptions and demand patterns,” Maersk stated in a release.

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Source: Seatrade Maritime News, Splash 247