Massive Danish shipping firm Maersk is raising alarm bells about the future state of the global economy.
Despite reporting “exceptional results” this earnings season, CEO Soren Skou warned, “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.”
Skou does not run just any shipping company. Maersk is the second largest container carrier in the world, controlling roughly one-sixth of global container trade. In Q3, the company generated $10.9 billion in earnings before interest, taxes, depreciation, and amortization.
Maersk is widely considered a bellwether for global trade. At present, the shipping giant expects the global container market in 2023 to be “broadly flat to negative,” with risks “skewed to the downside.”
According to Skou, the current environment is weighing “on consumer purchasing power which in turn impacts global transportation and logistics demand. While we expect a slow-down of the global economy to lead to a softer market in Ocean, we will continue to pursue the growth opportunities within our Logistics business.”
Maersk previously raised concerns about a potential economic slowdown during its Q2 reporting. At the time, the company pointed to falling consumer confidence and ongoing supply chain disruptions hurting shipping container demand.
While Maersk earned “substantially higher freight rates” last quarter, driving record profits, the company now expects global container demand to shrink by as much as 4% this year, down from earlier projections that anticipated upwards of 1% growth.
Skou did not hold back when discussing his outlook. According to the CEO, declining freight volumes are “clearly a sign that the consumer is not spending as much money as he or she has done in the last few years, and probably also a sign that many of our customers have too much inventory,” he told CNN.
He went on to say, “I’m not a macroeconomist, but I would be surprised if Europe is not in recession by now,” with the United States following “sometime next year.”
While Skou’s outlook appears dim, he believes the current environment reflects the sector settling back to normal conditions.
“It’s natural, and also good, that these freight rates come down from these super-elevated levels to something that is more normal,” he said.
According to the Maersk CEO, it’s “clearly better for the economy and for our customers.”
News of Skou’s outlook pushed Maersk shares down nearly 6%. Despite consecutive quarters of healthy profits, year-to-date the company’s stock remained down over 40%.
