A.P. Moller Holding’s CEO warns massive orderbooks to weigh heavily on freight rates

Robert M. Uggla, the CEO at A.P. Moller Holding warns that ‘massive orderbooks’ are likely to weigh heavily on freight rates for several years.

The chief executive of A.P. Moller Holding, sees oversupply impacting the container market in the coming years.

In 2023, containerised trade normalised after two years of pandemic lockdowns with extensive fiscal stimulus programmes driving an unprecedented boom in consumer demand.

“The market correction began in the end of 2022 as supply chain bottlenecks gradually eased. In addition, the oversupply of new container ships started to weigh heavily on freight rate sentiment,” Robert M. Uggla said in a letter in the company’s annual report 2023.

After the strong container shipping environment in recent years, this is a powerful reminder of the cyclical nature of shipping and how asset utilisation is partly a function of the industry’s newbuilding activities, the chief executive notes.

“With this in mind, and while container volumes are expected to grow in the coming years, some of A.P. Moller-Maersk’s competitors’ massive orderbooks are likely to weigh heavily on freight rates for several years,” Uggla said.

In his letter the top management of the company, Robert M. Uggla, highlights the fact that “by 2030, A.P. Moller – Maersk will need a million tons of green fuels to deliver on its pledges for low carbon operations, while current global production of green methanol is currently under 100,000 tons.”

As it is furthermore said in his letter, A.P. Moller – Maersk’s initiative to embrace methanol as a fuel has triggered a strong interest in producing green methanol.

“In November, the industry’s first fuel contract for the annual production of 500,000 tons of green methanol from 2026 onwards was signed between A.P. Moller – Maersk and Goldwind,” the chief executive added.

To remind, A.P. Moller Holding, established in 2013 by the Mærsk family as the investment arm of the A.P. Moller Foundation, is an investment company and the parent company of the A.P. Moller Group.

Source: A.P. Moller Holding.