Yahoo Finance Maersk warns of ‘dark clouds on the horizon’ as it cuts demand forecast amid growing recession fears
Fears of an imminent global recession deepened today when shipping freight giant Maersk sounded the alarm on dwindling demand for its containers amid the European energy crisis and sky-high inflation.
The Norwegian firm, often considered a bellwether for international trade, warned of “plenty of dark clouds on the horizon” as it slashed its forecast for global container demand for 2022 as a whole to a fall of two to four per cent compared with last year
The warning comes as former Bank of England governor Mark Carney also said he feared a widespread recession was unavoidable.
Speaking at the Hong Kong finance summit this morning, Carney said: “We’re headed for a global recession,” adding the trajectory for the economy was like trying to get a flight during the pandemic: “you know where you’re going, you just don’t know when you’ll get there.”
The growing fears about a global slump came ahead of the latest US interest rate decision from the Federal Reserve this evening. It is expected to order a further 0.75% increase in borrowing costs making it more likely that the world’s biggest economy will tip into recession. The Bank of England will make its decision on rates – also expected to a be a 0.75% rise – tomorrow.
The Chinese economy is also under pressure because of waves of severe Covid lockdowns.
Today Goldman Sachs analysts predicted that European natural gas prices would drop by about 30% early next year in part because of the marked slowdown in global demand.
Maersk CEO Søren Skou said: “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…we expect a slow-down of the global economy to lead to a softer market.”
Imports from the Far East are estimated to have fallen by 6% in Europe, and they declined as much as 7.5% in the US. Vacancy rates for warehousing fell to near-historic lows, as businesses scrambled for extra storage space to hold their swelling inventory levels amid a drop-off in consumer demand.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: ‘’Despite high hopes of an easing of supply snarl ups would be fair winds for a smoother passage ahead, Maersk instead is spotting fresh dark clouds on the horizon, as consumer confidence is sideswiped by looming recessions around the world.
“The company has been riding a wave of surging demand and has been buoyed by a rise in freight rates but it sees that tide receding as demand for goods subsides amid cost-of-living headwinds. It sees the ongoing energy crisis, fuelled by the ongoing war in Ukraine, as a particularly bleak spot which is exacerbating the pain of inflation for consumers and companies around the world.’’
Maersk reported sales of $22.8 billion (£19.8 billion) for the three months to September, up 37% on the previous year, while profits jumped 64% to $8.9 billion. However, the firm said global contained volumes declined 3% year-on-year in the third quarter, while global air cargo volumes fell 9% over July and August. Maersk shares fell 5% to 15,325 in opening trade.
Further signs of worsening global trade emerged from Germany this morning, with news that imports fell by a worse-than-expected 2.3% in September, according to data from the German Federal Statistical Office, while exports also declined by an unexpected 0.5%.
