Shipping giant Maersk warns of slowing global demand

Maersk, a Copenhagen-based shipping giant, has warned that global demand for shipping services is starting to wane amid a ‘looming global recession’.

Despite unveiling record earnings for the third quarter of 2022, the company cut its demand forecasts for the year. Maersk, often seen as a bellwether for international trade, now expects demand to decline by 2% to 4% by year’s end, rather than its previous prediction of -1% to 1%.

Commenting on the outlook, Maersk CEO Søren Skou said:

‘[I]t is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion…

‘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.’

The news is the latest indication that the world economy is heading towards a recession as surging inflation and higher interest rates squeeze households and businesses.

In an interview with Bloomberg TV, Skou added:

‘It’s really hard to be very optimistic with a war on our doorstep and a bigger energy crisis this winter so that is impacting consumer confidence and therefore also demand.

‘It’s quite likely that we either are or will soon be in a recession, certainly in Europe but potentially also in the US.’

Eurozone business activity has contracted for four consecutive months, while declining retail sales and service sector activity in the UK have many experts believing that the British economy is already in recession.

The US has fared better, but higher interest rates are yet to fully feed through into financial markets, housing, and business investment. When they do, a downturn in the world’s largest economy could trigger a global decline.