London Daily

Focus on the big picture.
Monday, Jun 23, 2025

Shipping giant Maersk's ominous warning of 'dark clouds on horizon' indicates trade is slowing globally

Shipping giant Maersk's ominous warning of 'dark clouds on horizon' indicates trade is slowing globally

The shipping industry is getting rather better at responding to prevailing economic conditions than it has been at times in the past

Anyone worried that a global recession is looming will take no comfort from the trading update issued today by AP Moller-Maersk.

The Danish company, the world's biggest name in container shipping, is usually a reliable indicator of what is happening - or about to - in global trade.

And its message today was not encouraging.

'Dark clouds on the horizon'


Soren Skou, the company's chief executive, said it was clear that, following an exceptional period of trade, freight rates had peaked and had begun to normalise during the last three months. He said this was driven by both decreasing demand and easing of supply chain congestion.

Mr Skou added: "With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession - there are plenty of dark clouds on the horizon. This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand."

His warning sent shares of Maersk, which more than doubled in value between the end of January last year and the middle of January this year, down by more than 7%. The company, the second largest on Denmark's blue-chip OMX 20 index after the drug-making giant Novo Nordisk, has seen its stock market valuation fall by two-fifths since it peaked on 13 January.

Mr Skou went on: "As a result of increasing inflation and economic slowdown, demand for ocean shipping began to decline in August and this was clearly observed in both rates and volumes."

He said Maersk now expected full-year contract rates to be slightly lower than it was expected earlier in the summer - largely due to volumes on east-west ocean routes seeing a 10% decline in volumes year on year.

Global slowdown


The comments from Maersk, which employs more than 80,000 people worldwide and which has a 17% share in the market for ocean-bound freight, are an ominous indication that trade is slowing globally.

Mr Skou said the company had been "anticipating normalisation" for quite some time and was ready for it.

He went on: "We are pulling back our outlook for the industry and expect global container demand to decline by 2-4% in 2022. From the global market data we can all observe, it should be clear that the risk [to that forecast] is to the downside going forward."

Patrick Jany, the chief financial officer, said that freight rates in shipment were expected to suffer a "pronounced deterioration" in the coming months.

Maersk containers onboard the container ship Hammonia Husum


Costs to come down


He said it would be prudent to assume that new contracts would be on lower terms going forward but said costs could be expected to come down as congestion at ports around the world - caused partly by Chinese COVID-related lockdowns - begins to recede. Unfortunately, he added, this would be matched by ongoing inflationary pressures.

The irony is that Maersk was reporting record quarterly results, with pre-tax profits for the three months to the end of September coming in at $9.17bn (£7.9bn), an increase of 62% on the same period last year.

It was the 16th consecutive quarter in which the company had reported a rise in earnings. During the first nine months of the year, Maersk made pre-tax profits of $24.9bn (£21.6bn), just over double what it achieved in the same period in 2021.

Sales in ocean shipping, the biggest part of the business, were up by 38% while in the land-based logistics and services arm, the next biggest division, they were up by 61% although that was partly flattered by acquisitions.

Mr Skou said the positive aspect of normalisation in shipping conditions was that global supply chains would begin to improve and would also help Maersk deliver a more reliable service in ocean shipping.

He said that shipping companies were starting to respond by taking capacity out of the market and this was likely to continue.

He added: "Every carrier will do what they think is right but I note that both in the Pacific trade and Asia-Europe trade, 15% of capacity has come out now so one could expect to see more capacity adjustment to meet demand in coming quarters - at least that would be our strategy."

The Maersk CEO said the company was not defining itself by its volumes and was not aiming to win market share in ocean shipping - rather it was looking to gain a greater share of spending from its existing customers.

He went on: "It's not half a percentage point of [extra] market share that is going to get us very excited."



Improved response


Those comments underline that the shipping industry is getting rather better at responding to prevailing economic conditions than it has been at times in the past. There was once a time when, rather than reduce capacity, shipping operators preferred to engage in futile price wars that simply resulted in a collapse in industry profits.

Signs that lessons had been learned came when, at the start of the pandemic, Maersk and others took a disciplined approach to withdraw capacity in response to an expected collapse in global trade.

In the event, the industry was pleasantly surprised, with demand surging as households subjected to COVID lockdowns spent money that they would have done on going out on consumer goods instead. That, along with previous capacity reductions and ongoing congestion in ports, means shipping containers around the world remain costlier than it did prior to the pandemic.

But it feels as if that boom is now over.

As Mr Skou put it in his concluding remarks to investors and analysts this morning: "We have a challenging year, or years, ahead of us as the world faces a combination of geopolitical uncertainty and inflationary pressure that we have not seen for decades."

Comments

Oh ya 3 year ago
So in short the economy is headed for the dumpster and what are you doing to prepare for it? Getting out of debt might be a good start.

Newsletter

Related Articles

0:00
0:00
Close
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
×