Global trade will contract this year, shipping giant Maersk predicts
One of the world’s biggest shipping companies has warned over a slowdown in global trade and said it expects profits to plummet this year.
Maersk, which enjoyed a boom in profits during the pandemic as lockdowns drove demand for online shopping, said profits would fall to as low as $2bn (£1.7bn) this year after it reported record $31bn earnings in 2022.
Full warehouses and looming recessions in many economies have cut demand, the company warned.
Vincent Clerc, chief executive, said: “The shipping market looks difficult right now. Freight rates have stabilised at a lower level that is not catastrophic for us.”
The company accounts for around a sixth of the world's shipping container traffic. The containers, which can be moved by boat, lorry and train, are used to transport finished goods around the world, particularly connecting Chinese factories with customers in the West.
Shipping can suffer from periods of earnings drought as competition intensifies and companies fight over less customers.
Ordering new ships during boom times can make this worse since they take years to build and may arrive just as prices start to ease, crushing margins.
Maersk said earnings for the last three months of the year fell to $6.5bn from $8bn a year ago after it shipped 14pc fewer containers.
The company recently pushed into land-based logistics, spending billions of dollars on warehouses and freight forwarding companies in order to be able to provide send-to-end logistics.
It has also spent some of its gains on greener vehicles.
The company ordered six large ocean-going vessels that can sail on methanol last year in addition to the 13 vessels ordered the previous year. The fuel is cleaner than the heavy oil-based fuel container ships use today, although it still burns to create some carbon dioxide. The company plans to be carbon-neutral by 2040, it says.
Shipping is responsible for 3pc of CO2 emissions and the International Maritime Organisation has a 2030 target of cutting emissions to 60pc of their 2008 levels, and halving all emissions by 2050.
It also ordered more than 400 electric trucks to shift cargo between its warehouses in North America.