Shipping, transport and logistics giant Maersk is reporting solid growth in global container trade but says the US-China trade war is a real risk.
The company posted underlying net profit of US$134 million for the second quarter 2019.
This is up from US$15m in the same period last year and driven by strong performance in its ocean division, the company says.
Earnings before interest, tax, depreciation and amortization (EBITDA) increased 17% to US$1.4 billion and revenue grew slightly to US$9.6bn.
“This was mainly driven by strong operational performance in ocean with an increase in average freight rates of 1.5%, a volume increase of 1.4% and unchanged total costs.
“Unit cost improved by 3.5%, driven by network improvements, leading to better schedule reliability and lower bunker consumption,” the company says.
Revenue in the terminals and towage division grew 13% to US$957m compared to Q2 last year. In gateway terminals, volume in Q2 grew by 8.5% compared to last year.
In logistics and services, EBITDA grew to US$61m in Q2 compared to US$52m in the same quarter last year and revenue was at US$1.5bn.
Global container trade grew around 2% in Q2 2019 and was in line with expectations.
However, the US-China trade war was having a negative impact on trade growth with Asia imports down 0.6%.
East-West container trade volumes grew by 3.2% in the quarter and European imports from Asia grew by 5.8%.
This reflected solid European retail sales “despite the manufacturing slowdown in Europe and uncertainty about Brexit negotiations and a severe growth of decline in Turkey”.
While exports from North America grew by 1.3%, exports from Europe grew strongly by 7.9% “possibly due to a change of some Chinese import sourcing from Europe instead of from the US as US-China trade restrictions escalated”.
“The impact of the newly imposed tariff hike is expected to be significant for the US-China bilateral trade and could in isolation remove up to 0.5% of global container demand in 2019 and 2020, and when US tariffs on additional [US$300bn] is implemented later in the year, it could result in a reduction of up to 1% in 2020.”
For the full year of 2019, global container trade is expected to increase by 1-3% and trade liberalisation in other parts of the world is partially outweighing the US-China trade tensions.
“Aside from the cyclical slowing of the global economy, the main risks to global container demand relate to the US-China trade negotiations, and if these setbacks materialise it could take global container trade growth to the lower end of the 1-3% interval.
“Other risks to the outlook relate to the effectiveness of fiscal and monetary stimuli in major economies, such as the US and China. Finally, the outcome of the Brexit negotiations poses a risk to UK and European container trade,” the company says.
