A.P. Moller–Maersk Group’s chief executive has warned that global trade will never return to pre-crisis growth levels, citing western companies manufacturing goods nearer home as a significant factor.
The head of the world’s biggest shipping line forecasts global trade to grow by 4% this year, noting that ten of the 13 rivals Maersk tracks made losses in the first half of 2014 as overcapacity became a more prominent issue.
Nils Andersen, Maersk’s chief executive, told the Financial Times: “Before, [trade growth] used to be double-digit globally, but we don’t see that coming back. Four to 5% is a realistic long-term trend. Provided the capacity is adjusted, this is a nice market to be in.”
He continued: “It’s only when shipping companies have been investing, hoping that the good old days will come back, that we have had issues. And the good old days will most likely not come back.”
Andersen pointed out that western European and US companies were each moving production to eastern Europe and Mexico respectively instead of relying on Asian manufacturing, adding: “You already have a lot of rescoring or nearshoring taking place.”
Additionally, he remarked that the most demanded goods which travel from Asia to Europe, particularly electronics, were becoming markedly smaller and thus taking up less container space.
The Danish company expects freight rates to continue to fall over the next few years, with Andersen stating: “We plan on a gradual decline in rates over time and then you make your cost adjustments.”
He also claimed the tensions between Russia and Ukraine were hurting shipping due to increased uncertainty, adding: “It may occasionally be quite good for shipping because the further you go away for your supplies, the better for us, but, in general, this is a negative trend. This is a regrettable situation.”
He continued: “We have uncertainties in our relationship with a big supplier of energy to global markets. This is not a good situation.”