Sinking Shippers Signal Global Goods Troubles

What happened in 2017, this globally synchronized growth stuff was central bankers taking one last stab at recovery. This was supposed to have been meaningful, a significance beyond pure numbers how all the world’s major economies were finally at long last on the upswing together.

Regardless, it is astounding how many major companies appear to have followed the narrative. One of them was the largest shipper in the world, Moller Maersk (AMKAF). Despite everyone talking about trade wars last year, Maersk officials remained upbeat anyway. If anyone would be affected by tariffs and retaliations, these would be the people.

After ten years of hardship, CEO Søren Skou was practically giddy last August. More than half a year of Trump vs. Xi hadn’t dented his horizon:

We’re now once again a growth company and we expect to reach a revenue of USD 40 billion. Of this, Hamburg Süd contributes half, and the rest will come organically… My optimism is built on a future scenario, where in 2019 in particular, we will experience a much better balance. Partly because new vessels will arrive on the market.

Maersk had been shrinking its fleet the previous few years, finally recognizing after 2014 drastic action was required. After 2017, they believed it would no longer be necessary. The future is bright.

Or it was. Mr. Skou’s comments today are nothing like his earlier message delivered just six months ago.

Maersk’s guidance for 2019 is subject to considerable uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and foreign exchange rates.

Sure, trade wars and bunker prices, but what was that something about foreign exchange rates? He’s head of the biggest shipping firm in the world, and yet his management team can only notice the obvious correlation between volatile “foreign exchange rates” and very clear periods where economic performance repeatedly defies official forecasted optimism.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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