Maersk expects global container traffic to decline in 2023

According to forecasts by the Danish AP Moller-Maersk specializing in sea freight and port terminal services, the volume of global container traffic may decrease in 2023 by 2.5% compared to last year. The reason for this is the expected “restrained” economic growth this year, EastFruit experts note, citing open sources on international logistics.

Logistics giant AP Moller-Maersk handles about one-sixth of all containers in the world.

The company believes that the change in demand for container transportation in 2023 compared to last year will range from -2.5% to +0.5%, which is comparable to the November forecast. One of the company’s key markets, China, is struggling, as are many emerging “vulnerable” markets as they enter a period of slow growth with high levels of debt.

“As economic activity slows and supply chain gaps are cleared in 2022, businesses have begun to stockpile, resulting in a slowdown in trading activity,” Maersk said.

Over the last three months of 2022, shipping volumes in the maritime segment fell by 14% compared to the same period in 2021, with the decrease observed on most ocean routes, the company said.

According to preliminary estimates, Maersk’s profit before interest and taxes in 2023 will be in the range of $2 to $5 billion, while it amounted to $30.9 billion at the end of last year and $19.7 billion in 2021.

“We believe this forecast reflects substantially lower container shipping rates in 2023, as well as a very unenviable outlook for the container market. In addition, the new CEO is likely to be somewhat conservative on the outlook for 2023, in our view,” Brian Borsting, credit analyst at Danske Bank A/S, said.

As of January 2023, freight rates have already dropped by 20-50% from their peaks in 2022. What’s more, freight rates are projected to fall another 15-20% in 2023, logirus reported, citing Reuters and a Dubai Port World (DP World) forecast.