Maersk unsure when global trade bottleneck will ease

Maersk unsure when global trade bottleneck will ease
Maersk unsure when global trade bottleneck will ease

Africa-Press – Namibia. Stephen Jones

ONE of the world’s biggest shipping and logistics companies, AP Moller-Maersk, said it does not know when the supply chain bottlenecks that are disrupting global freight trade will end.

In a report detailing its second quarter earnings, the Danish freight giant said continued congestion had increased the uncertainty surrounding the cost of shipping goods, known in the industry as freight rates.

“On the supply side, supplier delivery times remain lengthy, and it is still uncertain when capacity constraints including landside bottlenecks in trucking and warehousing will abate,” the report said.

The Covid-19 pandemic and the war in Ukraine, among other global events in recent years, have stretched supply chains, leading to shortages of some goods, logjams at ports, and surging prices for many products.

Demand for goods increased during the Covid-19 pandemic, at a time when ports and factories were shuttered or limited, left freight firms dealing with a backlog of goods.

A shortage of truckers has made those goods harder to transfer. Log-jams have been exacerbated by the fact that major Chinese ports were locked down until May as a result of the county’s zero-Covid policy.

More recently, the war in Ukraine and growing consumer concerns around inflation have both weakened demand for shipping containers, Maersk said.

Though it is unclear when demand will fall to pre-pandemic levels, some analysts say there are signs supply chain pressures are easing, pointing to falling wait times for goods shipments.

Maersk said wait times for ships at ports had eased during the quarter, particularly those on the US West Coast.

Freight rates are also falling.

According to the Freightos Baltic Index, it currently costs around US$6 100 to ship a 40-foot container, down from a September 2021 high of more than US$11 000. It cost around US$1 400 in February 2020.

The higher rates have been good for Maersk.

The group revised its projected 2022 earnings, and now anticipates to make US$37 billion before interest, tax, depreciation and amortisation (EBITDA). The firm initially projected full-year EBITDA of US$24 billion, as per Reuters.

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