4TH JULY 2022
A.P. Moller-Maersk, considered one of the largest container shipping companies with over 15% of the market is predicting a slow down in international container shipping with demand predicted to drop of in the later part of 2022 and into 2023. Maersk attribute the slow down to weak consumer demand and world-wide supply chain congestion.
International shipping container volumes are widely considered a barometer for international trade activity. Maersk announced a fall of 7 per cent container loadings in the last quarter of 2022 compared to the same quarter last year.
Maersk announced today announced that they expect demand to fall between minus 1 and 1 per cent in 2022, blaming weak consumer confidence ,rising cost of inflation and energy prices.
“Geopolitical uncertainty and higher inflation via higher energy prices continued to weigh on consumer sentiment and growth expectations,” the company reported in a statement.
“Given this background, in 2022 global container demand is now expected to be at the lower end of the minus one per cent and one per cent forecasted range,” it stated.
GLOBAL CONTAINER STOCKPILES
The International shipping container slowdown was most pronounced in Europe. Huge stockpiles of containers have built up in ports and storage yards as consumer demand falls. The Ukraine, Russia war is only making the situation worse Maersk warned.
“In Europe, supply chain congestion remained as retailers and manufacturers kept containers in ports and warehouses due to weak final demand. Port lockdowns in China due to the COVID-19 zero-tolerance policy as well as consequences from the war in Ukraine also caused strains in key areas of the logistics network,” a representative stated.
The announcement comes as Maersk confirmed that is has had a forecast-beating second-quarter.
“Trade congestion had lifted global freight prices, creating exceptional market conditions for the logistics business and advising it had raised its profit outlook for the 2022 year.
Maersk has reported it now expects to record underlying operating profits of around $US31 billion ($44.6b) in 2022, up from an earlier estimate of $US24b. Maersk expects underlying earnings before interest, tax, depreciation and amortisation of $US37b, up from $US30b.
The second quarter was especially good for Maersk, the company’s revenue rising over 50 percent year on year to $US21.7b operating profits more than doubled to $US8.9b.
It is widely believed the container shipping industry at large has benefited from higher container shipping rates as international shipping companies have had to pay high prices to ship cargo amid a plethora of market disruptions. Hapag-Lloyd recently raised its profit forecast after it said average shipping container rates had risen around 80 per cent in the first half of the year.
Maersk said that while shipping rates had recently declined slightly, they remain at historic highs, and ongoing congestion issues pointed to continued fluctuation in prices.
“The continued congestion and dislocation of supply and demand fundamentals in the logistics industry increases the uncertainty surrounding the outlook for freight rates,”