Date
23 November 2017
Søren Skou says the biggest threat to world trade comes from the faltering economies in China, Brazil and Russia. Photo: Bloomberg
Søren Skou says the biggest threat to world trade comes from the faltering economies in China, Brazil and Russia. Photo: Bloomberg

Maersk warns of global trade slowdown

Maersk Line, the world’s largest container shipping group, is warning that global trade growth could slow this year despite falling oil prices.

The biggest threat comes from the slowing Chinese, Brazilian and Russian economies, the Financial Times reported Monday.

“I’m personally more towards the low end of that,” Søren Skou, Maersk chief executive, said.

“Growth from a historical perspective is quite sluggish. It has a huge impact for us as an industry.”

Skou said low oil prices, down more than half from last year’s peak, are “a net positive for container growth” but the opposing forces are potentially greater.

“The economies in Europe are still very sluggish. Brazil, Russia and China — those three economies used to drive a lot of growth, and right now we are not really seeing that to the same extent,” he said.

“The only real bright spot is the US, and even the US is good but not great.”.

Maersk’s forecast is seen as a good indicator of global trade.

The group carries goods and products between Asia, Europe, the US, Africa and Latin America.

Container demand used to expand at up to 10 per cent a year before the financial crisis but Skou said those days are behind the industry.

He said demand growth this time would more closely mirror global GDP growth.

He said it is hard to interpret the first quarter because of the Lunar New Year lull.

“To my mind, volumes were sluggish. There is nothing in container volume numbers that suggest that the global economy is just on the verge of starting a new growth trend.”

The lower growth poses problems for an industry where Maersk Line is the only solidly profitable company with dozens of loss-making ones, and where new capacity outstrips volume growth.

“Before if you acquired too much capacity you could kind of work your way out of it. In a 4 per cent environment, capacity decisions take on a different perspective if you get it wrong. The good old days aren’t coming back,” Skou said

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