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Maersk CEO Doesn’t Expect US Election to Sway Container Demand
Maersk CEO Vincent Clerc downplayed potential impacts of the 2024 presidential election and possible shifting tariff policies on market demand, saying in a Thursday earnings call that consumer health will be the chief determinant regardless of the winner.
“Tariffs can be avoided by sourcing from different geographies. If the consumer does not buy the stuff that we transport, then there will be need for less transport services,” Clerc said. “With respect to the election, neither candidate has a view that ‘we need to slow down our economic activity and we want people to be able to consume less.’ Whoever wins and whatever tools they choose to deploy, as long as the economy seems strong and that consumption is strong, there will be continued strong demand for container traffic.”
The comments come amid concerns of an escalation of trade tensions between the U.S. and China, and an additional rise in container prices, particularly if Donald Trump wins next week’s election.
Ahead of the call, Maersk already had called for global container market volume growth to expand at a 6 percent pace and raised its earnings guidance for the fourth time this year.
The ocean carrier generated $15.8 billion in revenue, a 30 percent increase over the $12.1 billion in the 2023 quarter. The company’s ocean freight segment continued its drive profitability due to the Red Sea diversions driving up freight rates in 2024, with underlying earnings before interest and taxes (EBIT) of $3.3 billion—$2.8 billion ahead of the $538 million brought in during the year-ago period.
Clerc said the container shipping giant expects the Houthi attacks in the Red Sea to last “well into 2025,” preventing any kind of return to the Suez Canal. The logistics giant and Gemini Cooperation partner Hapag-Lloyd are already planning for this reality, unveiling in October that their new vessel-sharing alliance would keep sending ships around southern Africa’s Cape of Good Hope and avoid the Red Sea.
For the quarter, Maersk saw average ocean freight rates escalate 54 percent from the year prior, and 29 percent from the quarter before. Average freight rate per 40-foot equivalent unit was $3,236, the company said.
Average operated fleet capacity was 4,362 20-foot equivalent units (TEUs), 4.7 percent higher than the year prior, driven by an increase in chartered vessels. Increasing supply is putting downward pressure on the rates, which peaked in July and have partially normalized and then “stabilized” in the time since, Clerc said.
With the Gemini alliance set to officially debut its shipping network in February 2025, concerns remain about the firms’ ability to deliver on its 90 percent schedule reliability targets.
Sea-Intelligence data released Thursday illustrated that Maersk was the most reliable of 13 major container shipping firms with a 55.5 percent reliability rate in September. Hapag-Lloyd came in third with a 48.7 percent rate. While schedule reliability has stabilized within the 50 percent to 55 percent range throughout the year, it’s been on a slight downwards trend since the May peak.
Clerc believes the “modularization” of the network will benefit both carriers and bolsters compared to the current network, which is “a big spaghetti bowl of things that are very intertwined.”
“Instead of having one large network connecting very long strings with a lot of port calls, we will have a much simpler network with fewer port calls, and cleaner rotations,” Clerc said. “This means that if you have a disruption in one port, it doesn’t get transmitted into the network the way that it does today. It gets contained into its module. That’s how you can produce a significant uplift in reliability.”
In recent years, Maersk said the partners “did not go out with [the 90 percent] number lightly” after performing a series of tests in recent years.
“The simple fact of moving to this modular network will mean that with the same size fleet, we will be able to keep up with market growth and keep our share for between two and three years,” Clerc said. “Our primary focus right now is to be able to transport more volumes on the same amount of ship by having a network design that is just simply better than what else is out there.”
“M&A will continue to be a part of the roadmap. We continue also to have a view that organic first is our approach to growing logistics,” said Clerc. “Our view is that bolt-on is good for us, but maybe more towards the larger size rather than the small. because of the work that goes into doing such an integration, you might as well do it for something that is meaningful for the strategic progression of your business and the capabilities that you have.”
Maersk isn’t the only major supply chain bellwether that reported earnings, with some of the largest U.S. trucking companies also hoping for more of an upturn in the freight transportation market.
XPO’s North American less-than-truckload (LTL) business generated revenue of $1.25 billion for the third quarter 2024, up 1.9 percent compared with $1.23 billion for the same period in 2023. On a year-over-year basis, daily shipments decreased 3.2 percent, tonnage per day decreased 3.9 percent. Rates, excluding fuel costs, increased 6.7 percent. Including fuel, rates increased 3.7 percent.
Old Dominion saw LTL services dip 2.9 percent to $1.46 billion from $1.5 billion in the year prior. The dip is due primarily to a 4.8 percent decrease in LTL tons per day, and a 3.4 percent decrease in daily shipments. The declines were partially offset by a 4.6 percent increase in LTL revenue per hundredweight.
Net income for XPO came in at $95 million, 10.5 percent above last year. For Old Dominion, net profit declined 9.1 percent year over year, but came in at a much larger $308.5 million.
Both CEOs of the trucking firms pointed out in statements that the companies are still navigating a soft freight environment.
