over 1 year ago • 2 mins
Maersk, the world’s second-biggest shipping company, reported impressive quarterly results on Wednesday – but its outlook for the future was pretty puny.
What does this mean?
Global shipping giants like Maersk have had the wind in their sails the past couple of years, with strong pandemic demand and supply shortages sending shipping rates through the roof. Last quarter was no exception: sure, the number of containers it loaded fell by 8% compared to the same time last year, but it still posted a stellar 37% bump in revenue and its sixteenth-straight quarter of profit growth. Now, though, it looks like there’s a sea change on the horizon: the West is hurtling toward a recession and recovering supply chains are dampening shipping rates, so Maersk could find itself adrift before long. In fact, it already reckons global container demand will fall by as much as 4% this year.
Why should I care?
Zooming in: Batten down the hatches.
Some of Maersk’s rivals expanded their fleets in recent years, but Maersk chose to add stabilizing ballast to its business instead. The firm focused more on strengthening its logistics arm – not its shipping operations – with a series of acquisitions that means the segment now brings in about $17 billion in annual revenue. That could turn out to be a smart move: there are signs the shipping industry’s currently heading toward the dangerous phase of its notorious “boom and bust cycles”.
The bigger picture: Shiver me timbers.
Maersk controls around a sixth of the world’s container trade, which means its performance pretty reliably reflects the strength of the $29-trillion global trade market – and by extension, the global economy as a whole. That makes its pessimism about growth going forward pretty worrying, and it’s not the only one sounding the alarm. Just last month, the International Monetary Fund cut its prediction for global growth next year to 2.7%, and said one in three economies is even at risk of contracting.
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