Container Rates Drop to Unsustainable Levels, Says Maersk CEO

Emmanuel Addeh in Abuja

The global container shipping market faces overcapacity in the coming years and the rates paid by customers have fallen to an unsustainable level, Maersk Chief Executive, Vincent Clerc, has told the group’s annual meeting of shareholders.

Maersk last month warned that container shipping overcapacity would hit profits this year, in contrast to the record earnings achieved in the wake of the pandemic.

“Freight rates have fallen significantly since the good years of 2021 and 2022, and have fallen actually to an unsustainable level,” Clerc said.

German rival Hapag-Lloyd separately, has said the global oversupply of container ships and the crisis in the Red Sea will force it to cut costs in 2024, adapting sailings and ports following an 83 per cent fall in net profit.

Container rates jumped in December and early January as vessel attacks in the Red Sea forced companies to redirect ships away from the Suez Canal to a much longer journey around Africa, but have since faded as available capacity still exceeds demand.

An influx of new container ships last year added 9 per cent to the industry’s global capacity, which is expected to increase by another 11 per cent this year and a further 7 per cent in 2025, Maersk said.

In contrast, Maersk’s fleet has remained constant in size in the same period, a report by Reuters said.