A.P. Moller-Maersk, is likely one of the world’s greatest container shippers with a market share of round 17%, and is broadly seen as a barometer of world commerce.

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AP Moller-Maersk on Wednesday predicted a slowdown in international delivery container demand this yr amid weakening shopper confidence and provide chain congestion.

The Danish delivery and logistics firm — one of many world’s largest and a broad barometer for international commerce — stated it loaded 7.4% fewer containers onto ships within the second quarter when in comparison with the identical interval in 2021, prompting it to revise the full-year outlook for its container enterprise.

Maersk now expects demand to be on the decrease finish of its vary, between -1% and 1% in 2022, as rising inflation and vitality costs darken the worldwide financial outlook.

“Geopolitical uncertainty and better inflation by way of greater vitality costs continued to weigh on shopper sentiment and development expectations,” the corporate stated in an announcement.

“Given this background, in 2022 international container demand is now anticipated to be on the decrease finish of the -1% to +1% forecasted vary,” it stated.

Stockpiles build-up

Maersk warned that the slowdown was particularly pronounced in Europe, the place stockpiles have been build up at ports and in warehouses as shopper demand wanes.

Russia’s battle in Ukraine and Covid-19 lockdowns in China have solely exacerbated such congestion woes, it added.

“In Europe, provide chain congestion remained as retailers and producers saved containers in ports and warehouses attributable to weak ultimate demand. Port lockdowns in China because of the Covid-19 zero-tolerance coverage in addition to penalties from the battle in Ukraine additionally triggered strains in key areas of the logistics community,” the corporate stated.

Continued congestion and dislocation of provide and demand fundamentals within the logistics business will increase the uncertainty surrounding the outlook for freight charges.

It comes as Maersk confirmed forecast-beating second-quarter outcomes Wednesday as freight charges soar.

The corporate stated commerce congestion had lifted international freight costs, creating “distinctive market situations” for the logistics enterprise and prompting it to boost its revenue outlook for the yr.

Maersk now expects to file underlying working earnings of round $31 billion in 2022, up from an earlier estimate of $24 billion. Meantime, it anticipates underlying earnings earlier than curiosity, tax, depreciation and amortization (EBITDA) of $37 billion, up from $30 billion.

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Within the second quarter, the corporate’s income rose 52% year-on-year to $21.7 billion whereas underlying working earnings greater than doubled to $8.9 billion.

The container delivery business at massive has benefited from greater freight charges as firms have needed to pay file sums to move their items amid a plethora of market disruptions. On Thursday, delivery group Hapag-Lloyd AG raised its revenue forecast after it stated common freight charges rose round 80% within the first half of the yr.

Maersk stated that whereas freight charges had just lately softened barely, they continue to be at historic highs, and ongoing congestion points pointed to continued fluctuation in costs.

“The continued congestion and dislocation of provide and demand fundamentals within the logistics business will increase the uncertainty surrounding the outlook for freight charges,” the corporate stated.