A.P Moller-Maersk, the operator of the world’s second largest shipping company, released its 4th quarter results which were in line with expectations but its outlook for 2023 came in below consensus.

The company is expecting weak rates, particularly in the second half of the year, due to the arrival of new vessels and the expiration of contracts negotiated in 2022.

The net income for Q4 2022 was $4.98 billion, a 44% decrease from the previous quarter and 18% lower than the previous year. The company’s guidance for 2023 is adjusted EBITDA of $8 billion to $11 billion, which would be a 70-78% drop from 2022 but still 40-93% higher than pre-COVID levels in 2019.

The average rate per 40-foot equivalent unit in Q4 2022 was $3,869, which was down 23% from the previous quarter and 3.5% lower than the previous year.

The company’s CEO, Vincent Clerc, stated that the drop in rates and import volumes was due to the inventory correction at large retailers and lifestyle brands in North America and Europe. The company expects contract rates for 2023 to be negotiated at levels close to the prevailing spot rates.

Clerc also mentioned that agreements have already been signed for half of the year’s contract volume, mainly with Asia-Europe customers, with trans-Pacific deals to be signed in March and April.