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The world’s largest container shipping company warned that there would be a “price to be paid” from the US-Chinese trade conflict next year even as global demand slipped to its lowest level in more than two years.
AP Moller-Maersk, the Danish shipping and logistics group, said it expected global container trade to be reduced by 0.5-2 per cent in the next two years due to increased tariffs between the US and China.
“The impact right now on US-China trade is that Chinese imports to the US have gone up and US exports to China have gone down.
“Obviously there will be a price to be paid some time in the first quarter . . . There will be no real impact until after Chinese new year [in February],” Soren Skou, Maersk’s chief executive, told the Financial Times.
But he stuck to Maersk’s long-term guidance of an increase of 2-4 per cent in global container demand — a proxy for trade growth — albeit with 2019 expected to see a rise at the lower end of that scale. Before the 2008 financial crisis container demand often increased by about 10 per cent each year.
He added that Maersk had seen good volumes in the fourth quarter and saw the drop in global container demand in the third quarter to 2.7 per cent — down from 5.8 per cent last year — as “usual cyclicality and seasonality”.
His comments came as Maersk released third-quarter results where both revenues and profits came in just ahead of badysts’ expectations.
Revenues increased 31 per cent from a year earlier to $10.1bn, helped by the acquisition of container shipping group Hamburg Süd as well as underlying growth in most of its main businesses. Earnings before interest, tax, depreciation and amortisation rose 16 per cent to $1.14bn. Analysts had forecast revenues of $10bn and ebitda of $1.09bn, according to Reuters’ consensus estimates.
The group narrowed its full-year guidance for ebitda to be between $3.6bn and $4bn compared with a previous range of $3.5bn-$4.2bn. It issued a profit warning in August as its former guidance was $4bn-$4.5bn.
Shares in Maersk were up 0.4 per cent in early trade on Wednesday.
Mr Skou said its container shipping and ports businesses were “on an upward trajectory” as it managed to “overcompensate” for a sharp rise in fuel costs due to an emergency surcharge and benefited from higher freight rates.
Container shipping has been plagued by overcapacity in recent years but consolidation in the sector has led to tentative optimism that the industry may start behaving more rationally.
Maersk has undergone a radical transformation in recent years, jettisoning its businesses related to energy including its oil exploration and production unit. “We have had good momentum on our reorganisation. We are now one integrated company,” Mr Skou said. He added that the group was still on track to list its oil drilling subsidiary next year.
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