Seek Solutions as Shipping Drops

A.P. Moller-Maersk, the world’s largest container shipping company, has warned that trade tensions and an economic slowdown are slowing growth in global freight.

Maersk, which is seen as an indicator of global trade patterns, cut its forecast for global growth in container traffic this year due to the trade dispute between the United States and China.

“The recent escalation of the trade war induced by an increase in tariff rates and threats of implementing additional tariffs could take global container trade growth to the lower end of the 1-3% interval (range),” CEO Chief Executive Soren Skou said, referring to a forecast range it had given three months ago.

During his three years as CEO, Skou has sold off the Danish group’s oil and gas business to focus on the container business, a strategy some analysts say has left Maersk exposed during economic downturns.

The strategy was initially welcomed by investors, but Maersk’s share price has fallen 42% since a peak in July 2017 and is now virtually trading where it was when Skou took on the job in June 2016.

On Friday the group reported first-quarter results in line with expectations as a decline in container volumes was balanced by higher freight rates.

The trade war depressed trade volumes between Asia and North America in the first three months of the year, it said.

New tariffs could reduce the expected growth in global container volumes by up to 1 percentage point, Skou told a press conference in Copenhagen after returning from a trip to China.

“We hosted 50 Chinese customers for dinner in Shanghai yesterday and I can assure you that they all wanted the trade war to end soon,” Skou said.

“They live off exporting goods, so there is also a pressure on the political system in China to find a solution,” he added.

He further cautioned that even if a solution between the world’s two top economies was found, the trade wars will not end. “Then the U.S. will just turn its gaze towards Europe,” Skou said, referring to U.S. President Donald Trump’s threat to impose tariffs on cars from the European Union and other producers from around the world.