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Maersk CEO says shipping slowdown signals recession


London
CNN Business

Skyrocketing shipping rates since the start of the pandemic have been a huge boon for Maersk. But the Danish shipping giant warns its business will soon have to endure tougher times.

The company said Wednesday that a looming global recession is expected to reduce container demand by 2-4% in 2022, with “many dark clouds on the horizon.”

Maersk shares, which are seen as a barometer of the health of the economy due to the company’s exposure to the movement of goods around the world, fell nearly 6%. The stock has has fallen 35% so far this year.

While Maersk posted record profits last quarter due to “significantly higher freight rates”, it said rates began to decline towards the end of the period “due to weaker demand from customers, coupled with markets beginning to normalize with less supply chain disruption” and less congestion.

In addition, ocean freight volumes are down. CEO Søren Skou told CNN’s Julia Chatterley that the drop is “clearly a sign that the consumer is not spending as much money as they have in recent years, and probably also a sign that many of our customers have too much inventory.”

Consumption in general, he added, is “weighed down by very, very negative sentiment.”

“I’m not a macroeconomist, but I would be surprised if Europe isn’t in recession now,” Skou said. He thinks the United States will likely follow “sometime in the next year”.

Demand for larger goods like TVs, sofas or barbecues also fell after people shopped big during the lockdowns. Now they won’t need to buy replacements for a while.

“Once you buy that, you probably won’t have that demand for a few years,” Skou said.


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