Shipping giant Maersk has reported a significant decline in container volumes between the U.S. and China, dropping by 30-40% in April amid escalating trade tensions. The company cautioned that a prolonged trade conflict could lead to a decrease in global shipping volumes for the year. Despite these challenges, Maersk is maintaining its profit forecast, benefiting from ongoing disruptions along the Red Sea trade route that have resulted in increased freight rates. The trade tariffs introduced by U.S. President Donald Trump have forced many businesses worldwide to adjust their sales targets, prompting major economies to lower their growth forecasts.
Maersk, often seen as an indicator of international trade, has revised its expectations for global container volume growth down to a range of 1% to 4%, compared to an earlier estimate of 4%. CEO Vincent Clerc highlighted that while shipping volumes between the U.S. and China have declined sharply, the company has managed to redirect shipments to other markets with strong demand. In light of these developments, Maersk anticipates a potential market rebound in the second quarter if customers utilize a pause in U.S. tariff applications to build up inventory. However, there remains a significant risk of demand decreasing in the second half of the year if tariffs continue without rollback.
The ongoing trade war has cast a shadow over the U.S. economy, raising concerns about labor availability amid low unemployment rates. Moreover, Maersk has downsized some vessels operating between the U.S. and China, while its German competitor Hapag-Lloyd reported a 30% cancellation of shipments to the U.S. from China. Nevertheless, Maersk still projects earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year to be between $6 billion and $9 billion. Following these updates, Maersk shares saw a slight increase.
In addition to the trade issues, Maersk expects disruptions in the Red Sea to persist throughout the year due to ongoing tensions involving Houthi militants. These disruptions have led to longer shipping times and higher freight rates, as ships are rerouted to avoid conflict zones.