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Shipping giant Maersk warns of looming global recession; Royal Mail workers to strike on Black Friday – business live | Business

Shipping giant Maersk flags slowdown in demand as dark clouds gather

Signage at the Maersk offices in Copenhagen, Denmark.
Signage at the Maersk offices in Copenhagen, Denmark. Photograph: Andrew Kelly/Reuters

Container shipping giant Maersk has sounded a warning that global demand is slowing, saying that “freight rates have peaked”.

The Copenhagen-based company told investors that the Ukraine war, Europe’s energy crisis, high inflation and a ‘looming global recession’ were all hitting the world economy.

It now expects global container demand to fall by between 2% and 4% this year, down from a previous forecast of +1 to -1%.

Although A.P. Moller – Maersk posted another record quarter for July-September, its chief executive Søren Skou warned that demand was falling:

However, it is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion.

The warning knocked shares in Maersk by over 5%.

The world’s biggest shipping company saw its earnings rocket as the global economy reopened after pandemic lockdowns, and demand for containers surged. Its profits tripled in 2021 to $24bn.

But now, weakening demand as soaring inflation hits spending are weighing on the sector.

CEO Skou adds that ‘dark clouds’ are gathering:

With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon. This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand.

Shares in Next have risen 2% this morning, to the top of the FTSE 100 risers index, after it reported slightly stronger sales than expected (see 7.37am post).

But the retailer, like the rest of the sector, faces difficult times as customers will have less disposable income to spend.

Matt Britzman, equity analyst at Hargreaves Lansdown, explains:

“Broadly speaking, Next’s had a decent third quarter, though cost-of-living headwinds are still mounting for the retailer. Although the headline points to sales growth, if interest income is stripped out underlying sales saw a small decline.

A bumper week at the end of September was the standout for sales. ‘Winter is coming’ rang true as a colder week meant shoppers headed out to stock up on woollies and other warm clothes.

That’s about where the good news ends as the last two weeks of the quarter showed sales down 3.7% and 1.3% respectively and the outlook for the rest of the year points to a 2% drop over the fourth quarter, in line with previous guidance.

Adam Vettese, analyst at social investing network eToro, agrees:

Conditions are set for a disappointing Christmas period, with many households starting to feel the cost-of-living crisis begin to bite.

“Sales are forecast to dip 2% year-on-year for the rest of the year, although the firm has maintained its profit outlook.




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