News | Business | Shipping Firms: World's largest shipping firm says almost 10% of its fleet has been idled due to coronavirus
“Our expectation is that we will see demand significantly down in the second quarter, maybe as much as 20% to 25%. But, we will also match that on a one-to-one basis with reductions in capacity,” Soren Skou, CEO of A.P. Moller-Maersk, told CNBC’s “Squawk Box Europe” on Wednesday.
“It helps continue to serve the customers but also to take out a lot of costs and keep our pricing stable,” he added.
The world’s largest container shipping company said it expects 2020 to be a “challenging year,” with demand expected to decrease across all business in the second quarter.
In an effort to offset a slowdown in global trade, A.P. Moller-Maersk said it had canceled more than 90 sailings, or 3.5% of total shipping capacity, in the first three months of the year.
It expects close to 140 sailings to be canceled in the second quarter.
A blank or void sailing is a sailing that has been canceled by the carrier.
Charles Mostoller | Bloomberg | Getty Images
When asked whether idled fleet capacity could increase even further in the second quarter, Skou replied: “I would expect that if we actually see a further drop in demand then the idle fleet, for sure, will increase as we adjust the network size to ensure that we continue to have a high utilization and take out as much costs as we possibly can.”
It comes as the company reported first-quarter revenue of $9.57 billion, largely in line with analyst expectations. It reported first-quarter revenue of $9.54 billion a year earlier.
Meanwhile, earnings before interest, tax, depreciation, and amortization (EBITDA) increased 23% to $1.52 billion over the first three months of the tear, slightly above company guidance provided in March.
Shares of the A.P. Moller-Maersk slipped almost 6% during morning deals.