The recent Israel-Hamas ceasefire and the Suez Canal’s own expectations of further stability in the Red Sea still don’t have Maersk quite convinced of an imminent return to the waterway.
“Everybody is worried about the same thing,” Maersk CEO Vincent Clerc said in a fourth quarter earnings call. “Is it safe to travel? When we get to sail back to the normal trade routes, we need to be sure that it is not only safe today, but that we won’t have to go back a few months later because a certain situation has reignited.”
Clerc stressed the work and money required to bring vessels back through the Red Sea and “redo all the berthing lineups in the U.S., in Europe and in the Mediterranean, so that we can cater for this new service that arrives certainly at different times.”
The CEO said it would cost “hundreds of millions of dollars…maybe more” if Maersk’s networks had to revert back to rerouting around southern Africa’s Cape of Good Hope after committing to a Red Sea return. Maersk has been avoiding the area since December 2023, when Houthi militants began attacking ships in the region.
While Clerc cited that customers are eager to go back, “they all always have that caveat. We don’t want to go and flip-flop back and forth. You get one shot at going through the Suez.”
Timing of a Red Sea return will be the top determinant in the company’s 2025 profit. Maersk’s projections for underlying earnings before interest and taxes (EBIT) range between $0 and $3 billion. The low and high end of the guidance are both based on whether ships will return to the Red Sea closer to the middle or end of 2025.
As the uncertainties of the Red Sea and U.S. President Donald Trump’s tariff policies remain at large, Maersk anticipates wider global container volume growth to be 4 percent in 2025, with the container shipping firm forecasting that it will grow in line with the market.
“There’s some expectations that as long as the tariffs are measured and as long as the administration stays true to the fact that they’re going to do something on tariffs, but with an eye on inflation, that things will be okay and will not have a huge impact on volume,” said Clerc. “Of course, if things turn completely and somebody slaps 60 percent tariffs overnight, then this will have an impact. But that is not what seems to be the dominant scenario so far.”
Maersk stock popped as much as 10 percent on the end-of-year report, with fourth quarter revenues growing 24.3 percent to $14.6 billion on $2.2 billion in underlying net income, and $3.6 billion in profit before interest and taxes. The income numbers were a heavy improvement from the year-ago quarter, which saw a $442 million loss and $839 million in EBITDA, largely on the back of higher freight rates due to mass rerouting around the Cape of Good Hope.
External market factors aside, Maersk’s forward-looking performance will now also be tied to its new vessel-sharing partnership with Hapag-Lloyd, the Gemini Cooperation, which officially went into service Feb. 1.
That alliance has a lofty schedule reliability goal of 90 percent, which is still well beyond both carriers’ current percentages. According to Sea-Intelligence, Maersk had the top schedule reliability metric of all major carriers at 60.4 percent, while Hapag-Lloyd remains at 49 percent.
The Cooperation’s East-West network, which is expected to be fully phased in by June, should decrease costs for both carriers by a combined $500 million due to better asset utilization and lower bunker consumption.
The new network will rely on a “hub-and-spoke” model where mainline ships sail exclusively to major ports and hubs, while smaller shuttle services will be used to call on the smaller ports before docking at major ports when necessary to hand off cargo.
During the earnings presentation, Clerc highlighted that a cargo ship leaving Xingang, China, would only stop at three ports before reaching an end destination of Bremerhaven, Germany. Previously, that route would take Maersk seven stops.
“The fewer the stops, the lower the risk that cargo will experience and accumulate port side delays,” Clerc explained. “Furthermore, with six out of the eight terminals that we rely on operated by [Maersk-owned] APM Terminals, there will be a better real time planning, prioritization and turnaround of vessels so as to neutralize any delay accumulated earlier in the journey and to prevent delays from accumulating during the transshipment.”
As Maersk looks forward to the alliance, its new partner is beefing up its eco-friendly fleet.
Hapag-Lloyd secured $4.3 billion in long-term financing to support an October order of 24 new liquefied natural gas dual-fuel vessels that are set to be delivered between 2027 and 2029.
The low-emissions, China-built ships can run on bio-methane, and will have a combined capacity of 312,000 20-foot equivalent units (TEUs), adding on to the company’s current fleet of 292 container ships totaling 2.3 million TEUs of capacity. Hapag-Lloyd ordered 12 16,800-TEU and 12 9,200-TEU dual-fuel vessels.
“We are continuously modernizing our fleet in order to deliver a high quality of service and to achieve our ambitious decarbonization goals,” said Mark Frese, chief financial and procurement of Hapag-Lloyd.
By 2030, the absolute greenhouse gas emissions of the company’s fleet are to be reduced by around a third compared to 2022. The company has the goal to achieve a net-zero fleet operation by 2045.
This isn’t the first deal for “green financing” that the ocean carrier has completed. Hapag-Lloyd leveraged the financing for six 23,500-TEU container ships ordered in December 2020.
