Maersk container ship at dockMaersk container ship at dock

With a mixed bag of economic data only getting more muddled, investors are looking to more specific indicators to assess the health of the overall economy. A.P. Moeller-Maersk (OTCPK:AMKBY), one of the world’s biggest shipping companies, is out with its quarterly earnings, which are widely seen as a barometer for global trade and the supply chain. The Danish firm controls about one-sixth of the world’s container trade, with offices across 130 countries and more than 100K employees worldwide.

By the numbers: Earnings before interest, tax, depreciation and amortization (EBITDA) soared 60% Y/Y to $10.9B, coming in way above consensus estimates of $9.8B. The “exceptional results” were driven by significantly higher ocean freight rates, as well as shipments on routes from Asia to Europe and to North America. Shares of Maersk still tumbled nearly 5% in Copenhagen as worries over shipping rates and volumes sunk the shipper’s outlook.

“It is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion. As anticipated all year, earnings in Ocean will come down in the coming periods,” CEO Søren Skou said in a statement. Global container demand is estimated to contract between 2% and 4% in 2022, down from a previous projection of +1% to -1%, though Maersk (OTCPK:AMKBY) confirmed full-year guidance for underlying EBITDA of around $37B and a free cash flow above $24B.

Additional worries: “With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon. This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand. While we expect a slow-down of the global economy to lead to a softer market in Ocean, we will continue to pursue the growth opportunities within our Logistics business. As a trusted partner, we are ready to support our customers in rethinking their supply chain needs through what is likely to be a period of a more volatile business environment.”

Related tickers: Danaos (NYSE:DAC), Global Ship Lease (NYSE:GSL), ZIM (NYSE:ZIM), Matson (NYSE:MATX) and Navios Maritime Partners (NYSE:NMM).

Photo by Galen Crout on Unsplash

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