Shipping group Maersk said on Thursday container volumes plunged 30-40% between the U.S. in China in April as a trade war erupted between the world's top economies, and warned a protracted dispute could shrink global volumes this year.
However, the Danish group stuck to its full-year profit guidance, helped by continued disruption on the Red Sea trade route that has pushed up freight rates.
Trade tariffs imposed by U.S. President Donald Trump have prompted companies worldwide to cut sales targets and major economies to revise down growth prospects, impacting demand for shipping goods at sea.
Maersk, viewed as a barometer of world trade, said it now expects global container volumes within a range of down 1% to up 4% this year, compared with the 4% growth estimated at the beginning of the year.
"Volumes between China and the U.S. dropped sharply during April, between 30% and 40% as tariffs went up. We were able to reallocate them to some other areas where there's still strong demand," CEO Vincent Clerc told journalists in Copenhagen.
Many companies rushed to ship goods to the U.S. at the beginning of the year in anticipation of potential tariffs. But most economists are calling the Trump tariff gambit a demand shock to the world economy which will sap global activity.
Maersk expects market growth in the second quarter, if customers take advantage of a 90-day pause in the bulk of planned U.S. tariffs to build inventories, but said there was a risk of demand contracting in the second half of the year if tariffs were not rolled back.
Maersk, whose customers include Walmart, Target, and Nike, said the threat of a further escalation in the trade war cast a shadow over the U.S. economy.
"The dream of being able to produce locally, with all you'll need for your supply chain, is not possible," Clerc said.
"Unemployment is at a historic low in the United States, and they are deporting hundreds of thousands of people. Where is the labour going to come from?" he added.
"If we have to pay U.S. labour, then no T-shirt will be sold for less than $150," Clerc said.
Maersk said last week it had downsized some vessels sailing between China and the United States. German rival Hapag-Lloyd said last month its customers had cancelled 30% of shipments to the U.S. from China.
Maersk shares were 0.6% higher at 1004 GMT.
RED SEA DISRUPTION
Maersk still expects earnings before interest, taxes, depreciation and amortisation (EBITDA) this year of between $6 billion and $9 billion.
JP Morgan analysts said in a research note they were surprised the shipper had maintained its outlook.
Maersk also said it expects Red Sea disruption to continue throughout the year, despite comments by Trump on Tuesday that the U.S. would stop bombing the Iran-aligned Houthis in Yemen, which helped it maintain its profit guidance.
Maersk and rivals have benefited from longer sailing times and soaring freight rates as ships are rerouted around Africa as Houthi militants have kept up attacks on Red Sea vessels in what they say is in solidarity with Palestinians in Gaza.
Trump said the Houthis had agreed to stop attacking U.S. ships, but the group later said the deal did not include sparing Israel, suggesting its shipping attacks would not come to a complete halt.
There have been no reports of Houthi attacks on shipping in the Red Sea area since January.
Its EBITDA rose 70% year-on-year to $2.71 billion in the first three months of the year, compared with the $2.41 billion expected by analysts in a company poll.
(Reuters)
