Supply chain disruption will 'normalise in the second half of 2022'

11 February 2022

Maersk expects supply chain disruption to continue into the second quarter – but normalisation will occur early in the second half of 2022.

Maersk said disruption would ease as labour shortages, bottlenecks and port congestion reduced, and new shipping capacity became available.

Maersk’s profitability increased by record amounts in 2021, driven by “high freight rates due to the ongoing impact from the pandemic that has resulted in disruptions of global supply chains”.

In a call with investors Søren Skou, CEO of A.P. Moller-Maersk, said: “Our guidance for the full year 2022 is based on the assumption that we will have a strong first half starting with the first quarter on par with the fourth quarter last year, and that a normalisation... will occur early in the second half of the year as labour returns to work, bottlenecks open up, capacity held up in port congestion is freed, and new capacity delivered.”

Concerning efforts to prevent disruptions, he said: “We will continue these efforts as we see the current market situation persist into quarter two. At the same time, we see conversations with customers change from procurement-led freight rate discussions to more holistic conversations on how we truly partner to keep supply chains running end-to-end.”

Maersk’s strategic response to the market situation included offering end-to-end integrated logistics and focusing on “resilience, flexibility, connectivity, and the ability to rapidly respond to supply chain shocks”.

This strategy involved increasing container freight rates and expanding fleet, container, and terminal capacity, as well making progress on their digital transformation to improve customer experience, efficiency and scalability of their business model.

Skou said their top priorities for the coming years would be accelerating procurement of green fuels and digital transformation. Part of decarbonisation efforts would include retrofitting existing ships with engines running on green fuels such as methanol, though he emphasised this would depend on new data in forthcoming years.

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