Maersk CEO points to strong U.S. cargo demand, dismisses recession concerns

The CEO of Maersk, a leading global trade indicator, said the U.S. shows no signs of entering a recession, with demand for cargo remaining solid. The announcement was made Wednesday during an interview with CNBC’s “Squawk Box Europe.”

Vincent Clerc, CEO, highlighted the resilience of the container shipping market despite the widespread economic uncertainties of recent years. He stressed that container demand consistently reflects the broader economic health.

Clerc stressed that while U.S. inventory levels have risen since the start of the year, they are not alarming and do not suggest a major economic downturn is imminent. He noted fluctuations in inventory replenishment that add some unpredictability to the forecast.

He also highlighted strong upcoming U.S. purchase orders from retailers and consumer brands, which indicate sustained consumer demand. “Current data and the economic indicators we monitor show continued consumer confidence and spending,” Clerc said.

The recent discussions have heightened recession fears in the United States, spurred by new, disappointing labor market data. However, a May report from the U.S. Census Bureau showed a 5.33% year-over-year increase in U.S. retail inventories, totaling $793.86 billion.

Another report from Container xChange suggested a potential looming recession for container traders and the logistics industry, noting that inventory levels could outstrip demand.

Contrasting these views, Clerc discussed Maersk’s surprise at continued strong container volume, predicting that this trend will persist without indicating a global economic downturn. He attributed much of this volume to Chinese exports, which have significantly impacted global container movement.

Looking ahead to 2022, Maersk had a more pessimistic outlook due to multiple global challenges. However, recent geopolitical tensions near the Red Sea have caused shipping lanes to be redirected to the southern coast of Africa, extending transit times and reducing global shipping capacity.

In his interview, Clerc also addressed the ongoing impact of these diversions, predicting they will last through the end of the year. “This adjustment requires additional vessels and containers, resulting in higher short-term costs,” he said. These additional expenses are likely to lead to price increases for shipments from Asia to major Western markets, potentially by 20%-30%.

Despite a decline in annual net profit and a slight decrease in revenue, Maersk has recently seen an improvement in margins, with the past few quarters performing better than at the end of the previous year.

By midday in London, Maersk shares were down 1.6%, reflecting the market’s reaction to the mix of positive resilience and ongoing challenges facing the company.