The world's largest container shipowner and a global trade &#34;barometer,&#34; Maersk, has issued a warning that the contraction of global trade has exceeded expectations in terms of both duration and extent, with declining demand in Europe and the United States, and dark clouds looming ahead.
Last Friday, Maersk released its second-quarter earnings report, showing a 40% year-on-year decline in revenue to $13 billion, with a 50% drop in revenue from its shipping business.
Vincent Clerc, CEO of Maersk, stated in an interview with Bloomberg that the container shipping industry is currently undergoing the largest adjustment period after the COVID-19 surge in 2021 and 2022. The time and extent of the global trade contraction may be longer than previously imagined:
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Since the fourth quarter of 2022, inventory adjustments seem to be extending, and it is now expected to continue until the end of the year. Based on ongoing destocking, Maersk believes that the growth range of global container throughput will be between -4% and -1%, compared to the previous range of -2.5% to +0.5%. Shipping is expected to remain in line with market growth.
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According to Bloomberg's analysis, Maersk's overall performance in the second quarter remained stable, but long-term inventory adjustments, risks of economic recession, and expectations of weak freight volumes have cast a shadow over its future performance, which may affect the company's financial situation in the coming months. Lower freight rates, coupled with new vessel deliveries and reduced disposable income, could lead to deteriorating financial indicators in the second half of this year and in 2024.
It is worth mentioning that the container shipping industry relies on global demand trends. During the COVID-19 period from 2020 to 2022, the industry experienced unprecedented prosperity as retailers and other companies replenished inventory to meet pent-up consumer demand, resulting in a situation where containers were in short supply and freight rates continued to rise.
However, since the beginning of 2022, container freight rates have plummeted significantly, and global central banks have adopted monetary tightening policies to curb inflationary pressures caused by demand. Although container freight rates have recently increased, this does not seem to be a sign of global economic recovery, but rather an impact caused by a decrease in shipping capacity.
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Maersk stated that the duration and extent of the global trade contraction may be longer than previously anticipated, considering the ongoing destocking, and has revised the range of global container throughput growth to -4% to -1%.

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A.P. Moller - Maersk

The world's largest shipping company, Maersk, warns that global trade contraction is "beyond expectations" with insufficient demand from Europe and the United States, and dark clouds loom ahead.