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The world's biggest shipping company warns that the global trade slump is probably here to stay in 2020

Nov 15, 2019, 16:31 IST

The MV Maersk Mc-Kinney Moller, the world's biggest container ship, arrives at the harbour of RotterdamReuters

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  • Maersk, the world's biggest container-shipping company, is sounding the alarm on global trade in 2020.
  • In its latest earnings report, the Danish company said that trade wars and Brexit "softened" global trade.
  • "The continued weakening of global sentiment, above all in the manufacturing sector, reduces the likelihood of a growth pick-up in 2020."
  • View Business Insider's homepage for more stories.

Maersk, the world's biggest container-shipping company, is sounding the alarm on global trade saying that trade wars and Brexit are dampening growth.

On Friday, the Danish company said in an earnings statement that global shipping growth "softened" to 1.5% in the third quarter, which it said reflected "the broad-based weakening of the economic environment in all the main economies."

It added that the "negative effects from escalating trade restrictions also weighed on trade growth."

Maersk is seen as a bellwether for global trade, given that it controls about 20% of all consumer goods shipped. Maersk has warned the effects of the trade war before, but it also said that it is able to offset the negative effects, and last month raised its full-year guidance.

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The company's shares jumped 1.8% at 11:15 a.m. in Denmark (5:15 a.m. ET) after delivering what it said was "strong operational performance" and "solid earnings progress" in its logistics and services unit, which in the quarter posted a 34% gain in earnings before interest, taxes, depreciation, and amortization (EBITDA).

Still, the company said the global trade situation isn't likely to improve.

"The modest container demand growth reflects the continued slowdown in global manufacturing and global export orders," Maersk said. "The continued weakening of global sentiment, above all in the manufacturing sector, reduces the likelihood of a growth pick-up in 2020."

Maersk added that the main risks highlighted were the US-China trade war, fiscal and monetary stimulus across the world, and Brexit.

On the US-China trade war, Maersk said:

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"The trade restrictions have reduced bilateral trade between the two countries, and it also led to shifts in trade structures."

US importers are now sourcing goods from Vietnam, Korea, Thailand, India, and Mexico, instead of China.

"Globally, the implemented trade restrictions have likely reduced container trade by 0.5% to 1% in 2019, via direct and indirect channels, such as deteriorating sentiment and business investments. In 2020, the negative impact on container volumes from tariffs is expected to be around 1%."

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