- Maersk, the shipping giant, warned that ‘dark clouds’ could threaten the global economy as slowing container demand means lower container demand.
- According to its CEO, Wednesday’s comments about the Ukraine war and high inflation were a burden on consumers’ purchasing power.
- Maersk is a beacon for global trade and expects a volatile environment in the future.
MaerskThe world’s largest container shipping company has warned that “dark clouds are on the horizon” for the global economy, as it predicted a slowdown of freight demand.
Its third quarter Earnings reportWednesday saw the Danish company reduce its 2022 demand outlook. They pointed out reasons consumers are not buying as they have been unable to. This shipping giant is a signpost for global trade’s health.
“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,” Maersk CEO Søren Skou said in a statement alongside the report.
He said that this affects consumer purchasing power and in turn, global logistics and transportation demand. The company also expects a slowdown in the global economy.
Many have been predicting worse times ahead due to the deteriorating economic climate. The International Monetary FundOctober was a warning that the world was heading towards a recession that would be worse than predicted.
Households’ real incomes — that is, adjusted for inflation — will fall as prices continue to rise and growth in wages stutters, the IMF said.
Maersk reported in its earnings report that the current economic slowdown would continue into the next year. Given that, it lowered its outlook for the growth of 2022 container demand to a decline of between 2% and 4%, from the lower end of the plus or minus 1% range.
Maersk beat Wall Street targets, posting third-quarter earnings in excess of $9.5 billion, against a $9.8 billion forecast. Bit said that freight rates are at an all-time high and will fall faster than expected due to lower consumer demand.
“As trusted partners, we are available to support our customers in thinking about their supply chain needs during what is likely be a volatile business environment,” the statement said.
The company beat Wall Street expectations with third quarter earnings of f$10.9bn, compared to $9.8bn forecast. However, it pointed out that freight rates are at an all-time high and are falling faster than expected due to lower consumer demand.
Maersk shares fell 4.9% in Europe on Wednesday following the earnings release. The stock has lost 39% since January when it reached an all-time high at 24,920 Danish krone.
