World’s Largest Container Shipper Warns Of Demand Slowdown Amid “Significant Inventory Adjustment”

The world has just a few major shipping companies, and one of the ones we track is A.P. Moller-Maersk A/S, which expects global containerized shipping volumes to slide by as much as 2.5% this year amid “muted” economic growth worldwide. 

Global shipping markets are normalizing after two years of surging demand that catapulted freight rates to the stratosphere because of supply chain snarls. Some spot rates for containers on major shipping routes across the Pacific and from Asia to Europe are down as much as 90%. 

“We’ve been seeing demand falling from both the US and Europe, and it’s a pretty sharp correction,” Maersk Chief Executive Vincent Clerc told Bloomberg in an interview. 

Earlier this week, the National Retail Federation published a report that forecasts US container imports would fall by 30% in February from a year earlier. This would be the weakest month since May 2020. NRF expects containerized volumes to remain weak through May. 

Maersk, which handles about one-sixth of all the world’s containers, has provided an ominous outlook for the global economy. The World Bank and IMF have all recently warned about recession threats. 

Last month, IMF Managing Director Kristalina Georgieva warned the US might avoid a recession, but the situation looks bleaker in Europe, which has been hit hard by the war in Ukraine, she said. “Half of the European Union will be in recession,” she warned. 

And even the world’s largest investment manager, BlackRock, recently said a global recession is right around the corner. It added:

“Recession is foretold as central banks race to try to tame inflation. It’s the opposite of past recessions,” the BlackRock team wrote In their 2023 Global Outlook.

And the days of overconsumption of goods, brought on primarily by fiscal stimulus, are over, and one of the main reasons global shipping lanes are slowing. When Maersk speaks, it’s probably worth a listen.