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Maersk prepares for a farewell to record high rates in first half of the year

The red-hot container market with historic high rates will cool off during the first half of the year, projects Maersk CCO Vincent Clerc. Though he declines to project whether this will happen in the first or the second quarter.

BY CHRISTIAN CARLSEN

Published: 06.01.21 at 15:26

The world's largest container line, Maersk, expects the red-hot container market to cool off in the first half of the year.

However, Maersk CCO Vincent Clerc declines to declines to project whether this will be a few weeks from now not until the second quarter.

"It will likely cool off during the first half of the year. Whether it will be in February or April or May, we don't know, and we're therefore prepared to keep working as it is now, or to start adjusting for when things return to normal again," says Clerc, who also serves as CEO of Maersk's Ocean & Logistics business.

Before Christmas, the CEO of Maersk competitor Hapag-Lloyd projected that the strong market with towering rates would continue into the second quarter.

Maersk is less sure of that, as a normalization of the market, according to Clerc, in particular depends on how quickly the global economy reopens, and how quickly consumers can return to past consumption patterns.

Maersk is therefore working from several scenarios, he explains.

"We have to be ready to act efficiently, if things cool down next week or three months from now, we have to be ready to follow that trend. We don't control it," he says.

"There are not enough containers in the world"

In addition to the record high freight rates, the container market is currently struggling with a severe shortage of containers to carry goods around the world, to great frustration among shippers and freight forwarders.

Clerc says that the situation has emerged due to "enormous" demand in the third and fourth quarter last year.

"This means that there are not enough containers in the world to handle the demand we're seeing today," he says:

"It's not because they're piling up in the wrong places. All ships that can sail right now are out sailing, and all containers that can hold goods are on ships and are in transport. The leasing companies have no containers in stock. We've leased, produced and ordered," says Clerc.

The Maersk CCO describes it as surprising that the situation has remained unchanged regardless of whether economies have been locked down or open.

"So there will be pressure for some weeks yet. Then we'll see after the Chinese New Year, where we again begin to receive some estimates of customers' orders," says Clerc.

Feels no effect of new lockdowns

Most recently, large swaths of Europe, including Denmark, where Maersk is headquartered, have been hit by new lockdowns after the spread of a new mutated coronavirus from the UK.

Maersk, however, has yet to feel any effects of the new lockdown, he says.

"So far it's nothing we can see. We don't know if the third lockdown will extend the high level, as people spend more time at home and shop more on Amazon and Zalando, or whether it will shorten it, as the economy is struggling. It's very difficult to predict," he says.

Traditionally, container lines blank more sailings ahead of the Chinese New Year, but that will not be the case this year, as there will only be very few blanked sailings, says Clerc.

"As it looks now, demand is so high that there will be enough demand for us to load more cargo for the two weeks which the Chinese New Year lasts. Secondly, we need ships to bring back containers from the US and Europe to Asia," he says.

English Edit: Daniel Logan Berg-Munch