London Daily

Focus on the big picture.
Saturday, Jul 19, 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
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
×