A.P. Møller-Mærsk has raised its annual forecast for the second time in just over a month. The reason is the severe disruptions in the Red Sea and the persistently high demand in global container traffic, which continue to drive freight rates up.

The Denmark-based company announced on Monday that, due to strong demand and disruptions in the Red Sea caused by attacks from Houthi rebels from Yemen, which have forced ships to be rerouted, it expects freight rates to continue rising until the end of the year. These reroutings have reduced capacity on the routes from Asia to Europe by 15 to 20 percent.

Maersk also sees signs of increasing port congestion, particularly in Asia and the Middle East, which is further constraining shipping capacities and exacerbating upward pressure on rates.

Already in early May, Mærsk had raised the lower limit of its annual forecast, citing similar factors as justification. Drewry Shipping Consultants' World Container Index reached 4,226 US dollars in the week of May 30, an increase of over 56 percent since the week of April 25. The prices for transportation on key routes from Shanghai to Rotterdam and Los Angeles were over 5,000 US dollars.

Mærsk now expects earnings before interest, taxes, depreciation, and amortization (Ebitda) of 7 to 9 billion US dollars, compared to the previous forecast of 4 to 6 billion US dollars. Analysts surveyed by FactSet expect full-year Ebitda of 6.09 billion US dollars.

The company now expects a free cash flow of at least 1 billion USD, compared to the previous forecast of at least minus 2 billion USD.

Despite the positive development, Mærsk warned that trading conditions remained more volatile than normal due to the unpredictability of the situation in the Red Sea and uncertainties about future supply and demand dynamics.

Container shipping companies started the year 2024 with a capacity that far exceeded weak demand, and a multitude of new ships set to be delivered this year. This caused freight rates to plummet from their pandemic-induced highs, and companies like Hapag-Lloyd began to cut their costs.

Nevertheless, Mærsk and several other container shipping companies reported better-than-expected results in the first quarter due to enhanced demand and rising prices. German company Hapag-Lloyd raised its forecast last month after exceeding expectations with a net profit of 319.6 million US dollars.

The maritime industry consultant John D. McCown estimated that global shipping companies achieved a combined profit of 5.4 billion US dollars in the first quarter, after reporting a collective loss in the previous quarter.