World commerce is more likely to gradual this yr as western economies tip into recession, in accordance with the chief government of the world’s second-largest container transport group AP Møller-Maersk.
Søren Skou, head of the Danish group, informed the Monetary Occasions that after years of bumper earnings, the bellwether of world commerce is anticipating earnings, demand and transport freight charges to shrink due to falls in shopper confidence and consumption.
“We see a recession looming . . . On the one hand, now we have by no means delivered such a fantastic outcome financially, however each indicator we’re is flashing darkish purple. Clearly, we anticipate a slowdown, we anticipate decrease earnings going ahead,” Skou mentioned.
Maersk reported its sixteenth consecutive quarter of year-on-year earnings progress within the third quarter on Wednesday, beating analysts’ forecasts with underlying working revenue up 60 per cent to $10.9bn.
Skou mentioned freight charges had began to normalise and that offer chain bottlenecks — brought on by a surge in demand after the primary wave of the pandemic — have been easing.
Shares in Maersk fell by 5 per cent on Wednesday morning as buyers anxious concerning the outlook.
Maersk has ordered comparatively few new ships in the course of the increase occasions of the previous two years however different traces have expanded their capability way more, resulting in issues these vessels will arrive because the business faces a slowdown.
Skou mentioned 2023 would both current the “remaining proof” of his longstanding argument that the transport business had turn out to be extra rational on account of consolidation or would present it remained liable to poor choices. Transport firms, most of them privately owned in contrast to listed Maersk, have historically gone by means of large increase to bust cycles.
Skou mentioned Maersk was ready to idle ships in a slowdown. “We’re prepared for this,” he added.
Maersk now expects international container demand — a proxy for commerce progress as most cross-border freight is transported by sea — to contract by 2-4 per cent this yr, towards its earlier estimate of progress of plus 1 per cent to minus 1 per cent.
The Danish group is healthier insulated if there’s a slowdown in its transport enterprise from its logistics enterprise, which now has annual revenues of about $17bn after a collection of acquisitions. Skou mentioned the enterprise could be as large as its transport enterprise by the center of the last decade and that Maersk was in search of additional acquisitions.
Maersk and different transport teams making bumper earnings are dealing with rising political strain to pay extra tax as they’re at the moment taxed primarily based on tonnage quite than earnings, resulting in small payments at current.
Skou mentioned he hoped any tax adjustments could be completed globally quite than nationally to make sure a “level-playing discipline” for all transport firms.