Maersk logistics revenue falls 16% YoY in Q3

Shipping giant Maersk today reported a sharp decline in its third-quarter revenue to $12.1 billion, a 47% year-over-year decrease— an expected result given the global market , the company stated in its results. Its logistics and services revenue fell 16% YoY to $3.5 billion. [caption id="attachment_93674" align="alignright" width="300"] Photo/Maersk[/caption] THE BIG PICTURE: Earnings this quarter represent market conditions industrywide and did not surprise company executives. “The financial results for Q3 2023 were in line with expectations in a difficult market environment, with good performance in terminals and stabilized logistics and services, which partly offset continued erosion in ocean,” according to Maersk’s earnings statement. “While volumes were up in most segments and cost reductions improved results, rates continued to erode, in particular in ocean, and are now close to 2019 levels.” BY THE NUMBERS: Maersk reported earned income before taxes in Q3 of $1.9 billion, an 83% YoY decrease. Maersk also reported for Q3: Logistics and services earned income before taxes of $339 million, down 14% YoY; Logistics and services gross profit of $1.1 billion, up 6% YoY; Ocean revenue of $7.9 billion, down 56% YoY; and Ocean income of $1.1 billion, down 89% YoY. “Revenue in ocean reflects the inventory corrections seen in Western economies in 2023 with lower volumes and significantly lower freight rates,” the company stated in its report. “In logistics and services, total revenue decreased, due to destocking in the United States in lifestyle and retail volumes as well as lower airfreight rates, only partially compensated by increased revenue from the integration of LF Logistics and Martin Bencher .” Maersk acquired LF Logistics in August 2022 and freight forwarder Martin Bencher in January 2023. WHAT THEY’RE SAYING: Maersk is impacted by lower rates and volumes, particularly in its air logistics for e-commerce. “Given the challenging times ahead, we accelerated several cost and cash containment measures to safeguard our financial performance,” Chief Executive Vincent Clerc said in the report. “While continuously streamlining our organization and operations, we remain dedicated to our strategy of fulfilling our customers’ diversified supply chain needs while pursuing growth opportunities across our terminals business and logistics and services.” Profitability decreased YoY with “an increased emphasis on cost management to protect margins in a lower-rate environment,” according to the financial report. STATE OF PLAY: Maersk’s workforce was reduced from 110,000 to 103,000 in Q3 with more cuts expected in Q4 to lower its workforce to less than 100,000, the company reported. By restructuring, the company will save $350 million, Maersk reported. “Given the worsening price outlook in ocean, Maersk is intensifying those measures and today introduced plans to further decrease the workforce by 3,500 positions, with up to 2,500 to be carried out in the coming months and the remaining to extend into 2024,” according to its report. NOTEWORTHY: Maersk this year landed the No. 25 spot on Air Cargo Next ’s Power 25 list of top airfreight forwarders, marking its first appearance on the list. The company launched Maersk Air Cargo in the second half of 2022 and has 12 Boeing 767-200s and 10 Boeing 767-300s, Air Cargo Next previously reported. FUTURE LOOK: “Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base,” Clerc said in the earnings report. “Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.” MARKET OUTLOOK: Maersk has a market capitalization of $23.8 billion.

Maersk logistics revenue falls 16% YoY in Q3

Overall revenue declined 47% YoY

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