Shipping giant Maersk, a key indicator of global trade, has not observed signs of a U.S. recession as freight demand remains strong, according to the company’s CEO on Wednesday. Vincent Clerc mentioned that the shipping container market has shown resilience in the face of recession fears in recent years. He highlighted that container demand serves as a reliable gauge of the underlying macroeconomic strength.
Clerc noted that U.S. inventories have increased compared to the beginning of the year but are not at a concerning level that suggests an imminent significant slowdown. Despite some variability in numbers related to companies restocking supplies, he emphasized that purchase orders from retailers and consumer brands importing into the U.S. indicate continued robust demand. The data and indicators available suggest a high level of confidence in ongoing consumption levels in the U.S.
Recent concerns about a potential recession in the U.S., the world’s largest economy, have intensified following weaker-than-expected job data, causing a divide among economists and market participants. U.S. retail trade inventories in May were up 5.33% from a year ago, reaching $793.86 billion, as reported by the U.S. Census Bureau.
A report from Container xChange highlighted that inventories surpass demand, signaling a potentially less prosperous period ahead for container traders, the logistics market, and retailers with excess stock. Maersk’s Clerc expressed surprise at the sustained container volumes in recent years and anticipated this trend to continue in the upcoming quarters, with no signs of an impending global economic recession.
Clerc mentioned that Chinese exports have been a driving force behind the strong container volumes, with an increasing share of containers originating from or destined for China. Looking ahead, Maersk expects the trend of high container volumes to persist, despite challenges such as inflation, the threat of a global recession, the European energy crisis, and the conflict in Ukraine.
The redirection of trade routes due to geopolitical tensions in the Red Sea has impacted freight rates and profits for Maersk. Clerc anticipated the need for continued diversions until the year’s end, leading to higher costs and capacity shortages. These challenges have resulted in increased expenses for Maersk, which may need to pass on to customers, particularly affecting routes between Asia and Europe or the U.S. east coast.
Despite a decline in year-on-year underlying profit and revenue, Maersk reported improved ocean freight margins compared to previous quarters. The company’s shares were down by 1.6% in London on Wednesday.
