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Cash-rich Maersk looks to Gemini for future profits
Committed to building a resilient supply chain and decarbonised logistics, the Danish boxhip giant reports record earnings and looks to a new Gemini alliance with Hapag-Lloyd to grow future profits
The Panama Canal nearly ran dry, missiles flew across the Red Sea and shipping supply chains were severely disrupted, but Maersk somehow managed to achieve its third best-ever financial year. For 2024, the boxship giant had earnings before interest and tax of US$6.5Bn.
It wasn’t easy though. As chief executive officer, Vincent Clerc, said, citing geopolitical changes and disruptions: “Our ability to navigate shifting circumstances and ensure steady supply chains for our customers was put to the test throughout 2024.” Behind the numbers lies a much-changed container giant based on three tightly linked businesses – ocean, logistics and services, and terminals.
But first the numbers. Revenues rose to US$55.48Bn, up by about US$4.5Bn on 2023, while the EBIT of US$6.5Bn was a more than US$2.5Bn improvement year-on-year. In general, analysts are impressed by the performance of a much-changed company.
Pointing out how Maersk has sold off long-standing stakes in non-essential businesses, investment analyst Morningstar notes: “Maersk is now a focused global shipper and logistics company after divesting its energy and drilling, banking, and towage businesses in recent years. It is investing heavily to build the logistics and solutions segment, hoping to see equal revenue as the core maritime shipping business in the future.”
Disruptions
Despite the disruptions in a tumultuous year, momentum was building throughout 2024. Reporting on Maersk’s third quarter, analyst investing.com highlighted “significant financial achievements and strategic advancements” including a war chest of US$22.3Bn in cash and deposits that will fuel acquisitions in the future.
During 2024, Mr Clerc was pushing ahead with a strategy of providing seamless services on land and sea in the form of warehousing and other links in the supply chain that, in analysts’ talk, make the group more vertical.
And it continues to do so. In February 2025, for example, Maersk signed a 10-year contract to handle the end-to-end logistics for Singaporean furniture company Castlery in an arrangement that illustrates where the company is heading. The contract covers ocean freight, intermodal transport and distribution, and warehousing. In short, a vertical supply chain.
And on the other side of the world, also in February Maersk completed its latest warehouse in Rotterdam, a 35,000-m2 cold store for fresh fruit, proteins and pharmaceuticals among other temperature-sensitive cargoes. One of a global network of leased and wholly owned cold stores for customers with perishables, the warehouse could hardly be closer to the ship. It is located right by a Maersk-owned APM terminal, Maasvlakte II, and next door is Maersk’s Star Depot for empty reefer equipment.
Although the mayhem in the Red Sea forced Maersk to hike freight rates like other shippers, profitability along the container routes actually improved, despite having to sail south of the Cape of Good Hope.
As Morningstar notes: “The company’s strong balance sheet, with cash and deposits totalling US$22.3Bn, and a substantial increase in EBITDA and EBIT demonstrate its operational progress amidst market volatility. The logistics and services and terminal segments have shown impressive growth, with the former achieving an 11% increase in revenues and the latter reaching record revenues due to higher volumes and tariffs.”
“Logistics and services and terminal segments have shown impressive growth”
Maersk’s annual report shows that profitability in the ocean-going business improved mainly because of simply raising freight rates, but also because of attention to a high utilisation and cost controls. “Operational costs were stable year-on-year, offsetting the increasing costs and additional bunker consumption of re-routing the network,” it explains.
Big-scale logistics
But can Maersk keep this up? With big-scale logistics as the new growth strategy, in February the Copenhagen-based group and Hapag-Lloyd launched their new Gemini alliance following a reshuffle of the great container shipping partnerships. A formidable force, Gemini boasts a 340-vessel fleet and 3.7M TEU capacity that will, Maersk promises, provide an industry-leading schedule once the alliance is up and running fully by June. It will take that long because Maersk and Hapag-Lloyd still have existing commitments under expiring alliances.
The phasing-in of Gemini, which is founded on 29 ocean mainliner services backed by 28 shuttle services, is expected to be completed with minimal disruption,” reports investing.com.
Decarbonised logistics
Since taking over the top job in 2023, Mr Clerc has focused on what he calls “resilient supply chains” during a period of considerable upheaval that are based on the historic business. He has worked his way through the ranks, most recently head of ocean and logistics and before then, chief commercial officer. His career has been marked by a talent for innovation, one of the most recent of which is a long-term bet on electric trucks for the last mile of delivery off the wharves and between factories and warehouses.
In January, Maersk started transporting the water pumps of a Danish client, Grundfos, in e-trucks. Although battery-powered delivery costs roughly three times as much as conventional diesel vehicles, this is what a growing number of clients want.
"This is a gigantic task, but we must not be intimidated by it," says Birna Odefors, managing director of Maersk Area Nordics, where a large number of customers are pioneering what are known as decarbonised logistics. The pilot programme started in late 2024 but is already heading for the transport of 600-800 containers a year.
These emissions-free deliveries are linked to another Maersk innovation called ECO Delivery Ocean that a growing number of clients are also buying into. The ships are fuelled by a mix of alternative marine fuels, such as waste-based biodiesel and bio-methanol that combined, cut emissions by about 80%.
Looking forward, a slimmed-down Maersk sees a highly profitable future on most of its routes but most importantly, in fast-growing southeast Asia. The shipping business now contributes about 75% of EBITDA and Mr Clerc is relying on Gemini to deliver the profits of tomorrow.
“The Asia-Pacific economy is set to remain a crucial driver of global growth in 2025, with strong performances expected in several emerging markets alongside stabilising conditions in major economies like China,” the group predicts, citing in particular India, Vietnam, Thailand and Malaysia.
As for the Red Sea, in February Maersk welcomed peace talks in the region but warned that “the situation remains complex and unpredictable” and that “the security risk for commercial vessels in the Red Sea and Bab-el-Mandeb Strait remains high.”
While hopeful that things will settle down by mid-2025, Maersk will continue to take the long way round until it is confident its ships, seafarers and cargoes are safe.
Events
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