Maersk Is Passing on a $500 Million Monthly Fuel Bill. Someone Has to Pay It. – Moby THE GIST
Maersk delivered decent first-quarter numbers, but the company was refreshingly blunt about what comes next. The Iran war has nearly doubled its fuel bill, and the costs are already landing on customers. The question is whether those customers can keep absorbing them.
WHAT HAPPENED
Maersk reported first quarter EBITDA of $1.75 billion, down 35% from a year earlier but broadly in line with expectations. Revenue fell 2.6% year on year to $13 billion, beating forecasts of $12.5 billion. Volumes told a more positive story. Ocean grew loaded volumes by 9.3% and ran at 96% asset utilization. Logistics and Services grew revenue by 8.7%, improving its EBIT margin for the eighth consecutive quarter. Terminals lifted volumes by 4.3%. Across all three divisions, demand held up.
The problem is costs. Bunker fuel prices surged from around $600 per metric ton before the conflict to just under $1,000 per ton, adding roughly $500 million per month to Maersk’s operating expenses. The company has so far passed most of that through to customers via contract renegotiations and higher spot rates, and it maintained its full-year underlying EBITDA guidance of $4.5 to $7 billion.
Despite the maintained guidance, shares fell around 7% in European trading. The market was not selling the past. It was pricing the future.
WHY IT MATTERS
The first quarter only captures a few weeks of the Iran war’s impact. The conflict began on February 28, meaning most of Q1 reflects a world that still had relatively normal energy costs and open shipping lanes. CEO Vincent Clerc was clear that Q2 and Q3 are going to look very different.
At $500 million in additional monthly fuel costs, Maersk is absorbing the equivalent of $6 billion in annualized cost increases from the energy shock alone. The only reason it has not blown a hole in earnings already is that freight rates have risen in response, pushing the burden onto the companies shipping goods and, ultimately, onto consumers.
That chain of cost transfer is the real story. Maersk can reprice contracts. Its customers, the retailers, manufacturers, and distributors moving goods around the world, then have to decide how much they absorb and how much they pass on in higher prices. At a moment when consumer confidence is already under pressure, the answer matters enormously for global demand in the second half of the year.
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Clerc was explicit about the risk. Higher shipping costs feed into product prices. Higher product prices dampen consumer spending. Weaker consumer spending reduces the volume of goods being shipped. And lower volumes, arriving just as Maersk and others take delivery of new vessels ordered during the post-pandemic boom, would pile pressure on already-stressed freight rates. It is a feedback loop that nobody in the shipping industry wants to see activated.
There is also a structural issue around the Strait of Hormuz that is easy to miss in the headline numbers. The Strait has been effectively closed since late February, with more than 800 ships and around 20,000 crew members stranded west of the narrow waterway. Even if a peace deal were reached tomorrow, Clerc said the impact on cargo flows would be limited in the near term.
Fuel costs will not normalize the day the strait reopens, because the oil market will take time to rebalance and operators will remain cautious about routing vessels through the area until safety is genuinely established. The energy crisis, in his words, does not go away the day peace comes.
Maersk’s network flexibility has helped. The company cut its Ocean unit cost by 7% despite the disruption, a genuine operational achievement. And the diversification into logistics and terminals, a strategy questioned during the pandemic when pure shipping was printing money, is now providing earnings stability precisely because those businesses have lower exposure to Middle East routes and fuel costs.
But none of that insulates Maersk, or its customers, from what is coming. The guidance range, wide by any standard, at negative $1.5 billion to positive $1 billion in underlying EBIT, reflects genuine uncertainty about how the next six months unfold. Whether that range proves too optimistic depends almost entirely on factors outside any shipping company’s control.
WHAT’S NEXT
Maersk is watching two things above all others: whether fuel costs begin to ease as oil markets respond to ceasefire signals, and whether consumer demand in the U.S. and Europe holds up as higher shipping costs work their way through supply chains into store prices.
A prolonged conflict at current energy prices, combined with softening consumer demand in H2, would push Maersk toward the bottom of its guidance range and potentially through it. For now, the company is doing what it can control well and waiting on what it cannot.
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