Shipping Firms Face Strong Demand, Congestion and Rising Freight Costs

The global shipping industry is facing a combination of strong demand, congestion and geopolitical disruption.

Global supply chains face pressure as demand and congestion increase.

The closure of the Strait of Hormuz and disruptions associated with the conflict involving Iran have added pressure to already strained supply chains.

Two major container-shipping companies, Denmark's A.P. Møller-Maersk and Germany's Hapag-Lloyd, have highlighted strong demand and changing freight-rate conditions, Jack Denton and Janet H. Cho reported for Barron's Daily.

Maersk said its second-quarter results were supported by strong volume growth, although ocean freight rates were lower.

The company reported that second-quarter EBITDA and EBIT were $1.8 billion and $340 million, respectively.

Hapag-Lloyd has also reported strong demand and higher spot rates in its container-shipping business. Asian ports and shipping networks are facing pressure as strong export flows and geopolitical disruptions affect capacity and schedules.

The pressure on shipping costs could eventually affect U.S. companies that depend heavily on imported goods and global supply chains.