Maersk sees drop in global container demand this year as supply chains hit

Maersk sees drop in global container demand this year as supply chains hit
Containers from shipping giant Maersk piled up in the freight yard of Berlin’s Behala west harbour in February. (AFP)
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Updated 14 May 2020

Maersk sees drop in global container demand this year as supply chains hit

Maersk sees drop in global container demand this year as supply chains hit

COPENHAGEN: Shipping group A.P. Moller-Maersk on Wednesday warned of a sharp drop in global container volumes due to the coronavirus pandemic, sending its shares down sharply.

The coronavirus epidemic has thrown the global container shipping trade off balance as global supply chains have been upended and businesses and factory activity in China and later across the world were disrupted.

Maersk, which also reported a 23 percent rise in first-quarter core profits, now expects global container demand to contract this year, after previously forecasting growth of 1-3 percent.

“As global demand continues to be significantly affected, we expect volumes in the second quarter to decrease across all businesses, possibly by as much as 20-25 percent,” Chief Executive Soren Skou said in a statement.

Maersk shares were more than 5 percent lower in early trade. The shares have risen by a third since March when they reached their lowest level in more 10 years.

Maersk said that it had canceled more than 90 sailings, or 3.5 percent of total shipping capacity, in the first quarter to deal with the slowdown in trade and keep freight rates from falling.

It expects to cancel some 140 sailings in the April to June period.

Maersk reported earnings before interest, tax, depreciation and amortization (EBITDA) at $1.52 billion, slightly above company guidance provided in March when it suspended full-year guidance due to uncertainty caused by the coronavirus pandemic.

The world’s biggest container shipping company reported revenue of $9.57 billion versus the $9.59 billion forecast by 16 analysts in a poll compiled by Maersk. 


Market traders ready to ride ‘Biden bounce’

Market traders ready to ride ‘Biden bounce’
Updated 19 January 2021

Market traders ready to ride ‘Biden bounce’

Market traders ready to ride ‘Biden bounce’
  • "Biden moving into the White House could drive markets into a bull run more sharply than previous inaugurations," a financial expert says

DUBAI: Investors are expecting a “Biden bounce” in global markets following the inauguration on Wednesday of Joe Biden as the 46th US president.

“History teaches us that we can expect the markets to react favorably to the inauguration of a new US president — and this time around it is likely to be no different,” said Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisers, with over 80,000 clients and $12 billion under advisement.

“Indeed, Biden moving into the White House could drive markets into a bull run more sharply than previous inaugurations because it is hoped the incoming administration will bring stability and, possibly, a halt to the uncertainty following the fiercely contested election. 

“Investors will also be buoyed by the $1.9 trillion fiscal stimulus announced by Biden, the Federal Reserve’s willingness to support markets, the new president’s multilateral trade agenda and his plans for stepping up the vaccine rollout. All of this will encourage confidence and optimism,” Green said.

Mazen Al-Sudairi, head of research at Riyadh-based financial services company Al Rajhi Capital, agreed with the optimism regarding a “Biden bounce.”

“One of the important outcomes with Biden is stability in the market. But there is also the stimulus factor coupled with the vaccine that is giving an indication of recovery in the market. This perceived unity in the US will be healthy for the global and Saudi market,” he told Arab News.

However, Green said that investors should be cautious for three reasons: “First, a market rally is going to be difficult to sustain indefinitely due to the enormous economic scarring caused by the pandemic.

“The major long-term headwind is mass unemployment, which is hitting demand, growth and investment on Main Street and which, ultimately, will have to impact Wall Street.

“Second, the new administration will have policies that will have an effect on different sectors of the economy. There will be a readjustment period that needs to be taken into account.

“And, third, not all shares are created equal and stock markets are heavily unbalanced at the moment. A handful of sectors are bringing up entire indexes,” he said.