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By all indications, Europe has slipped into recession (November 2, 2022)

“It is very difficult to remain optimistic in the face of a war on our doorstep and a deep energy crisis this winter,” Soren Skou, head of the world’s second-largest container carrier AP Moller-Maersk A/S Maersk, told Bloomberg Television. “All this affects consumer confidence and , therefore, on demand… It is very likely that in Europe and potentially also in the US we are either already in recession or will soon enter it.”

The company, which is headquartered in Copenhagen and accounts for a sixth of the global container trade, believes that demand for container transportation will fall by 2-4% this year. After such a disappointing forecast, its shares fell by 5.7%, which is the largest monthly decline. For comparison: in the previous forecast figures from 0 to -1% appeared.


However, complaining Maersk, as they say, is a sin – for the last few quarters, its shares have grown by leaps and bounds against the background of the global economic recovery after the pandemic. Now, a natural and expected decline in business activity has come and, as a result, a decline in cargo transportation.


“The skyline has been blackened by storm clouds,” the container carrier said in a quarterly report.


Skow fully agrees with the authors of the report.


“Global trade is moving in the opposite direction this year,” he says. “Of course, durable goods are on the decline. Most likely, many people at the initial stage of the pandemic invested heavily in them. We also see the effects of the slowdown in the economy, the war in Europe and what it has done for consumer confidence.”


However, the company’s third-quarter earnings before interest and taxes rose to $9.48 billion. This is higher than the forecast of $8.63 billion by economists polled by Bloomberg.


Maersk is noting faster-than-expected price cuts in freight rates and that warehouses in Europe and the US are now rapidly filling up to capacity as consumer demand declines.


Maersk forecast for 2023 negative global container shipping market. The forecast is based on the same pessimistic macroeconomic forecast.


The pessimistic forecast of the leader in the field of container transportation was confirmed by disappointing data for the euro area. The index of business activity in the manufacturing sector continued to fall in October and fell from 48.4 in September to 46.4. There has not been such a low manufacturing PMI in the single European currency area since the start of the pandemic, i.е. 2.5 years. The decline was recorded in all major European economies except Ireland. The largest is in Spain, followed by Germany.


The business data is so bad that S&P Global is confident that the manufacturing sector of the eurozone, which consists of 19 European countries, including all the major economies of the Old World, has already entered a recession.

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