Maersk CEO says container rates hit unsustainable levels

After two stellar years for the container shipping industry that brought record-breaking profits, the cyclical nature of the container shipping sector has yet again started to bite as normalization of the market pushes rates to the opposite end.

“Freight rates have fallen significantly since the good years of 2021 and 2022, and have fallen actually to an unsustainable level,” Maersk CEO Vincent Clerc is quoted by Reuters as saying at yesterday‘s group shareholder meeting.

According to Clerc, further headwinds are emerging on the supply side with an additional 11% of containership capacity expected to be added to the global fleet this year followed by 7% more in 2025.

WorldCargo News has approached Maersk for a comment on the matter but is yet to receive a statement.

The sector has been plagued by overordering and consistent overcapacity issues for years.

However, container shipping has been very resilient during the recent black swan events of COVID-19 and Russia’s involvement in the war in Ukraine. Amidst the COVID pandemic, the surge in demand notably tapped into additional capacity, and shipping companies were able to capitalize on increased freight rates.

Nevertheless, the recent Red Sea crisis has exacerbated the situation as companies continue to reroute their ships around Africa, causing delays and congestion as African ports struggle to handle the additional influx of cargo.

Furthermore, global trade arteries, the Suez Canal and Panama Canal have been faced with reduced transits amid the rerouting and reduced water levels at Gatun Lake.

Even though the perfect storm nudged the rates upward in December and January, the trend did not continue.

As a result, industry majors expect this year‘s earnings to be affected.