Maersk, the world’s largest container shipping company, predicts that container freight rates will gradually decline and return to normal in 2022, but still higher than the level before the outbreak.
Maersk CEO Shi Suoren said recently that Maersk will be committed to “ensure a soft landing of freight rates from the current high level.” Maersk will also improve the reliability of liner services. Shi Suoren said that before the epidemic, Maersk’s punctuality rate was close to 80%, and this year it dropped to 40%. It is expected that the service will be improved by the end of the year.
However, some people do not believe Maersk’s forecast of normalization of freight rates. Experts evaluate Maersk’s operational prospects from four aspects.
The first is in terms of new ship orders. The launch of new ships in 2022 is expected to be lower than that in 2021, and 2021 is lower than 2020. This means that the market’s supply of capacity may still be insufficient. If there is no economic recession in 2022, it is reasonable to infer luck. The price should be higher than this year.
Secondly, Maersk has repeatedly raised its performance forecasts by a large margin, showing that the company’s statement has always been conservative. From the second half of 2020 to the first half of this year, Maersk has sharply raised its performance forecast several times, but the statement is not very positive, and the adjustment of the performance forecast can more specifically reflect the company’s views.
Third, Maersk spent US$6.6 billion to repurchase shares, which is a great affirmation of the long-term market outlook. At the end of last year, Maersk announced the launch of a $1.6 billion share repurchase program for the first time.
In May of this year, Maersk disclosed that it would launch a new round of equity repurchase, which is expected to reach US$5 billion in the next two years.
Analysts pointed out that Maersk’s frequent share repurchases may have two implications: First, the stock price is still undervalued, and share repurchases are beneficial to major shareholders; second, they are optimistic about the long-term market outlook. If the market performs poorly in 2022, Maersk should retain cash. Instead of spending huge sums of money to buy back equity.
Fourth, Maersk believes that the on-time rate of container ships will have a chance to recover by the end of 2021. Analysts regard this as a signal that freight rates will remain high throughout 2021.
This shows that at the end of 2021, Maersk still does not see the possibility of a significant increase in the on-time rate. In other words, the problems of port congestion and tight supply are still difficult to alleviate, supporting the continuous increase of freight rates.
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Post time: May-14-2021