Maersk en-route to success

**Luke Wilson** (0:01)
Disruption in the Strait of Hormuz fails to dent profits for one of the world's biggest shipping companies. It's World Business Express from the BBC World Service. I'm Luke Wilson. South Korea's Incheon Airport becomes the world's busiest for the first time, and Japan turns to human fridges to cope with soaring temperatures.
The boss of the world's second biggest shipping company, Maersk, has told World Business Express it's investing more in alternate overland routes to try and deal with the closure of the Strait of Hormuz. I've been speaking to Vincent Clark after Maersk revealed it made $3 billion in profits between April and June, a billion more than analysts expected. He told me what was behind it.

**Vincent Clark** (0:48)
The demand that we saw, especially from the Far East, has shrugged off all of these negatives and continued incredibly strong, putting actually a lot of pressure on the infrastructure, especially on the land side, both at origin in Asia, especially in China, but also certainly at destination in Europe, in the UK, in Africa and in Latin America. And that has basically created a great environment, a pricing environment that has been completely different and some of these bottlenecks appeared.

**Luke Wilson** (1:17)
And we've also had results from another company in your industry, Hapag Lloyd, today. They've talked about an additional $600 million in costs because of the Middle East conflict. Are you seeing a similar elevation in costs? Are you expecting that to continue or rise?

**Vincent Clark** (1:31)
Yeah, I think obviously what the war in the Middle East has created is a much more elevated oil price, which is a big cost item for us, obviously.

**Luke Wilson** (1:41)
And do you know how much you've passed on to customers as a result of those increased costs?

**Vincent Clark** (1:46)
So actually, if you look at how things developed, you can see that immediately after the beginning of the war in the month of March and April, rates were adjusted pretty much in line with what actually these cost increases have been to be, and then they kind of stabilized for about a month or so, until following Chinese New Year, we started to see this very, very strong demand, creating bottlenecks in places that are completely unrelated with what is happening in the Middle East. And that created a second bout of increases during the month of May and June, which has brought the market to much more elevated level on the global stage.

**Luke Wilson** (2:23)
Yeah, and I want to come on to those global issues you mentioned, but still staying in the Strait of Hormuz, we've heard today from the maritime intelligence firm, Kepler, that traffic through the Strait is a near three month low. What are you expecting in the coming weeks and months?

**Vincent Clark** (2:37)
I think for us, as it is today, we are not transiting through the Strait of Hormuz.
We have taken the ships out of the Strait while there was the ceasefire that we needed to take out. We're bringing, we're serving our customers through land bridge solution, but we do not assess that the situation today in the Strait of Hormuz is safe for us to be able to transit our ships.

**Luke Wilson** (3:01)
And those alternatives you mentioned, are you confident they will work as long time alternatives?

**Vincent Clark** (3:06)
They have been working already extremely well for the last three months and have kept, you know, food on the shelves of supermarkets across the regions from Kuwait to the UAE. We're getting into almost a new normal with those routes with respect to the investments that have been made on the ground in terms of bringing more trucking power, bringing more rail connections, bringing more connectivity across speeding the customs regimes in order to keep the cargo flows moving. And I think we've found a balance right now that will allow us to continue to sustain serving our customers in the region through those routes, at least for the foreseeable future.

**Luke Wilson** (3:48)
And is Maersk putting more investment into alternate routes as a result?

**Vincent Clark** (3:53)
Yes, I mean, obviously, these routes on everything else equal are not the cheaper routes to take to get there, but they are the cheaper route available at this stage. So we're investing a lot in cost to do that.

**Luke Wilson** (4:06)
Just one last question, Vincent. It was interesting to hear you talk about how a lot of strength of these numbers was driven by Chinese exports, infrastructure, data centers. We talk a lot about the amount of money in the data center and AI space particularly. Is Maersk and your industry benefiting from that?