AP Møller-Maersk warned of a “radically modified enterprise surroundings” as income plunged on the world’s second-largest container delivery line on account of a pointy drop in demand and freight charges.

The Danish delivery and logistics group beat analyst expectations within the first quarter however cautioned that earnings for the remainder of the 12 months could be weaker even because it forecast demand to enhance within the second half.

“We delivered a stable monetary efficiency in a difficult market with decrease demand attributable to a continued destocking. Visibility stays low for the rest of the 12 months,” mentioned chief govt Vincent Clerc.

Container delivery went by a unprecedented growth after the primary wave of the Covid-19 pandemic in 2020, with the business making extra money in three years than within the earlier six a long time.

However corporations akin to Maersk and market chief Mediterranean Delivery Firm are braced for a troublesome 2023 as companies scale back their inventories and freight charges fall from document highs.

Working revenue at Maersk fell by greater than two-thirds to $2.3bn within the first quarter in contrast with a 12 months earlier however was forward of analyst expectations of $2bn. Revenues have been down by 1 / 4 to $14.2bn.

Maersk caught by its full-year steerage of $2bn-$5bn of working income however mentioned the primary quarter was more likely to be the strongest of the 12 months.

Nonetheless, the corporate anticipated the stock correction to be over by the top of the primary half and volumes to select up within the ultimate six months of the 12 months.

Volumes in its core ocean enterprise fell by 9.4 per cent within the first three months of the 12 months whereas freight charges dropped by 37 per cent. Revenues in ocean fell by greater than a 3rd to $9.9bn whereas working income plunged by nearly three-quarters to $2bn.

Maersk mentioned it anticipated financial development to be “muted” and the container market — a proxy for world commerce — to almost certainly contract.

“As we alter to a radically modified enterprise surroundings, we proceed to help our prospects in addressing their provide chain challenges,” Clerc mentioned. “We’re happy to notice that prospects proceed to worth the built-in logistics options and shut partnership we offer.”