AP Møller-Maersk, the Danish shipping giant, has raised a red flag on the looming global recession as trade continues to slow following the Russia-Ukraine war and energy crisis, according to its latest financial report.
These microeconomic situations are currently impacting negatively on businesses as high inflation eats deep into their purchasing power.
Maersk also expects global container demand to fall by 2 percent and 4 percent this year and believes freight rates have peaked.
The Danish shipping giant has also cut its 2022 demand outlook as the current economic crisis holds back consumers from buying.
According to Maersk, the demand for logistics services moderated across global supply chains in the third quarter of 2022.
It pointed out that the supply-side bottlenecks continued to pose challenges, but there are signs of easing as COVID-19-related restrictions in China diminish.
On the other hand, freight and charter rates declined in the third quarter of 2022 relative to the previous quarter as the expected normalisation gained momentum through the quarter.
“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,” Søren Skou, the CEO of A.P. Moller – Maersk said while commenting on the report.
According to Skou, Maersk expects a slowdown of the global economy to lead to a softer market in ocean business and will continue to pursue growth opportunities within its logistics business.
“As a trusted partner, we are ready to support our customers in rethinking their supply chain needs through what is likely to be a period of a more volatile business environment,” Skou said.
Skou said freight rates have peaked and started to normalise during the quarter, driven by both decreasing demand and easing of supply chain congestion.
On its financials, Maersk’s revenue for the quarter increased to $22.8 billion while earnings before interest, taxes, depreciation and amortization increased to $10.9 billion.
The company’s earnings before interest and taxes increased to $9.5 billion and its profit stood at $8.9 billion for the third quarter and $24.2 billion for the first nine months.
