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Container Shipping Increases Set Stage for Surging Trucking Demand Once Containers Reach USA.

Container Shipping Increases Trucking Demands | Lazrtek Truck Wash

2021 Poised to be Banner Year for Trucking.

  • Container shipping increases significantly. It locked in a ‘significant bottleneck’ as demand surges back.
  • Maersk, the Danish company, seen as a bellwether for global trade, posted quarterly earnings before interest, tax, depreciation, and amortization (EBITDA) of $2.71 billion.
  • Maersk CEO Soren Skou told CNBC that he had “heard stories about carriers deciding to turn around empty containers and ship it back to Asia, rather than wait an extra week or two to fill it up with exports from the U.S.”
Container Shipping Increases Set Stage for Surging Trucking Demand Once Containers Reach USA.
Maersk containers onboard the container ship Hammonia Husum, as it leaves Portsmouth harbour. (Photo by Andrew Matthews/PA Images via Getty Images)

Container shipping firms are locked in a “significant bottleneck” as resurgent global demand stretches capacity and drives up freight rates, Maersk CEO Soren Skou told CNBC Wednesday.

Maersk, the world’s largest container shipping firm, missed its own fourth-quarter profit expectations Wednesday and posted a cautiously optimistic outlook for 2021 after an “exceptional while challenging quarter.”

Skou explained that after a 15% dip in Maersk’s volumes in the second quarter of 2020, the sharp rebound toward the end of the year, particularly in the U.S. and Europe, saw global trade return to a 5% year-on-year increase.

“That has caused a significant bottleneck in terms of lack of capacity and lack of containers, which have driven freight rates higher,” Skou said.

‘Completely unprecedented’

After removing capacity during the second quarter demand slump, Skou told CNBC that Maersk and other carriers now have their full container capacity deployed once again.

“So we are trying to deal with a surge in demand which is completely unprecedented, both a surge in demand because the consumers are spending, but also a surge in demand because a large restocking started, as large retailers actually stopped buying stuff in Asia in the second quarter of 2020 and well into the summer,” he said.

The Danish company, seen as a bellwether for global trade, posted quarterly earnings before interest, tax, depreciation and amortization (EBITDA) of $2.71 billion, fractionally above the $2.68 billion forecast by analysts, according to a Refinitiv poll, but below the company’s own estimates of $3.06 billion.

This marked an 85% increase from the same period last year, while revenue increased by 16% year-on-year to $11.3 billion, as the rebound in demand for goods that began in the previous quarter accelerated.

The company now expects EBITDA of between $8.5 billion and $10.5 billion in 2021, compared to $8.3 billion last year, noting that the outlook continues to be affected by the Covid-19 pandemic and its impact on demand patterns.

In the earnings report, Skou said Maersk is confident that it will continue to grow earnings as “the economic situation normalises in 2021 and beyond.”

“Given the current exceptional situation where demand surge has led to bottlenecks in supply chains and equipment shortage, the first quarter of 2021 is expected to be stronger than the fourth quarter of 2020,” the company explained in the report.

Empty containers

Reports emerged in January that shipping companies were rejecting tons of U.S. agricultural exports worth hundreds of millions of dollars in the final quarter of 2020, opting instead to send empty containers back to China to be filled with more profitable goods.

Meanwhile a crippling shortage of containers during the resurgence in global demand sent shipping costs soaring 300% and led to delays for goods shipped from China.

“For the carriers, it is obviously more attractive to have revenue, if you will, in the container in both directions, but clearly, I have also heard stories about carriers deciding to turn around empty containers and ship it back to Asia, rather than wait an extra week or two to fill it up with exports from the U.S.,” Skou told CNBC’s “Squawk Box Europe” on Wednesday.

See the aerial video: Massive Backup of Container Ships Off California Coast

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