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The world's largest container shipping company warns that there will be "paid prices" for next year's US-China trade conflict even as global demand drops to its lowest level in more than two years.
AP Moller-Maersk, the Danish shipping and logistics group, said it expects global container trade to decrease by 0.5-2 percent in the next two years due to rising tariffs between the US and China.
"The impact now on US-China trade is that Chinese imports to the US have risen and US exports to China have dropped.
"Surely there will be a price to be paid some time in the first quarter. . . There will be no real impact until after the Chinese New Year [in February], "Soren Skou, Maersk's chief executive, told the Financial Times.
But he sticks to Maersk's long-term guidelines for a 2-4 percent increase in global container demand – a proxy for trade growth – even though in 2019 it is expected to increase at the lower end of the scale. Before the demand for the 2008 financial crisis, demand often increased by around 10 percent every year.
He added that Maersk had seen good volume in the fourth quarter and saw a decline in global container demand in the third quarter to 2.7 percent – down from 5.8 percent last year – as a "regular cycle and seasonal".
His comments came when Maersk released third-quarter results in which earnings and profits came right in front of analyst expectations.
Revenues increased 31 percent from a year earlier to $ 10.1 billion, helped by the acquisition of the Hamburg shipping container group Süd and the growth that underlies most of its main business. Earnings before interest, taxes, depreciation and amortization rose 16 percent to $ 1.14 billion. Analysts expect earnings of $ 10bn and ebitda of $ 1.09bn, according to Reuters consensus estimates.
The group narrowed its full year guide to ebitda to between $ 3.6 billion and $ 4 billion compared to the previous range of $ 3.5 billion – $ 4.2 billion. This issued a profit warning in August because previous coaching was $ 4 billion – $ 4.5 billion.
Maersk rose 0.4 percent in early trade on Wednesday.
Mr Skou said container shipping and port businesses were "on the upward trajectory" because they managed to "overcompensate" for a sharp increase in fuel costs due to emergency surcharges and benefited from higher freight rates.
Container shipping has been hit by overcapacity in recent years but consolidation in this sector has caused tentative optimism that the industry may begin to behave more rationally.
Maersk has undergone a radical transformation in recent years, discarding its business related to energy including oil exploration and its production units. "We have good momentum in our reorganization. We are now an integrated company, "said Mr. Skou. He added that the group was still on track to list oil drilling subsidiaries next year.
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