Global trade disruptions caused by the ongoing conflict in the Red Sea are anticipated to persist throughout 2024, according to A.P. Moller-Maersk A/S, a key indicator of global trade health. This statement coincided with Maersk’s third consecutive financial guidance upgrade within three months, driven by rising freight rates bolstering the company’s profits.

Read also: Maersk Adjusts Surcharges Amid Escalating Red Sea Risks

On August 1, Maersk adjusted its forecast for underlying earnings before interest, tax, depreciation, and amortization to a range of $9 billion to $11 billion for this year, up from the previous estimate of $7 billion to $9 billion. Analysts had predicted an average of $8.76 billion, based on Bloomberg’s compiled estimates.

The Danish shipping giant had previously increased its annual profit outlook in May and June, citing greater-than-expected impacts of Red Sea congestion on global supply lines. Maersk now projects this disruption to extend at least until the end of 2024.

Attacks by Houthis have rendered the Suez Canal unsafe, leading to a significant 77% reduction in container ship traffic through the vital route compared to the previous year, according to Bloomberg Intelligence. Consequently, ships are rerouting around Africa, increasing vessel capacity requirements and elevating freight rates amidst a post-pandemic market slump with an oversupply of ships.

Maersk highlighted ongoing high volatility in trading conditions due to the unpredictability of the Red Sea situation and uncertain supply-demand dynamics in the fourth quarter.

The company also revised its 2024 global container trade growth forecast to 4% to 6%, up from the previous upper range of 2.5% to 4.5%. Additionally, Maersk now expects free cash flow in 2024 to be at least $2 billion, doubling the earlier projection of at least $1 billion.

Despite an initial 4.2% rise in Maersk shares in Copenhagen, they later traded 0.7% lower by 3:06 p.m. local time. Brian Godsk Borsting, chief analyst at Danske Bank Credit Research, noted that the strong rise in container freight rates in recent months made the guidance upgrade somewhat anticipated.

Maersk also released preliminary second-quarter revenue and profit figures ahead of the full report due on August 7, which fell short of average analyst estimates.