Growth in global container trade more than halved in the first three months of 2019, and the latest salvos in the US-China trade war could slow it further, the world’s largest shipping company warned in its first-quarter earnings on Friday.
AP Moller-Maersk pegged growth in global container trade at 1.7% in the first quarter, a sharp slowdown from average growth of 3.6% in 2018. The shipping giant also warned “the recent escalation of the trade war” — President Donald Trump hiked tariffs on $200 billion worth of Chinese goods and has threatened to extend duties to virtually all of them, prompting China to retaliate with higher tariffs on $60 billion worth of US goods — could push full-year growth to the lower end of its 1% to 3% forecast.
Maersk’s shipping network spans more than 340 ports in upwards of 120 countries, making it a useful proxy for worldwide ocean trade. The company has repeatedly sounded the alarm. Global container trade rose 3.7% in 2018 according to its estimates, a sharp slowdown from 5.6% growth in 2017. CEO Søren Skou warned last August that the trade war’s impact “could easily end up being bigger in the US” than any other country due to Americans’ appetite for imported consumer goods.
The company reported a 3.1% drop in North American container imports in the first quarter, which pushed its overall container volumes down 2.2%. Management blamed a “broad-based slowdown in all the main economies,” along with a “fast-forwarding of US imports” as retailers brought forward orders to the fourth quarter of 2018 in anticipation of higher tariffs on Chinese goods.
However, a 3.9% increase in average freight rates helped to push Maersk’s revenues up 2.5% to $9.5 billion. Combined with lower container-handling, bunker, and network costs, total EBITDA soared a third to $1.2 billion.