A.P. Moller-Maersk A/S, a bellwether for global trade, said “muted” economic growth is set to push the world’s container shipping volumes down by as much as 2.5% this year.

The shipping market has normalized after two years of exceptionally high freight rates, when supply snarls and a shortage of vessels allowed Maersk and its peers to charge higher prices for their services and pocket record profits.

The world is facing “a significant inventory adjustment” after a period where demand has been “absolutely exceptional,” Vincent Clerc, who took over as chief executive officer in January 2023, said in a Bloomberg TV interview with Anna Edwards and Mark Cudmore.

“As the world became a bit more normal after the pandemic, we’ve seen some of these demands slow down,” the CEO said.
 
The Copenhagen-based container giant said it expects to grow in line with the market, as it unveiled guidance for 2023 which missed analyst estimates. Its shares initially fell as much as 5.7% in the Danish capital, before paring the loss and trading as much as 2.9% higher.

Maersk, which handles about one-sixth of all the world’s containers, said February 8 demand in the container shipping industry is set to be in a range of negative 2.5% to positive 0.5%. That compares with a November 2022 prediction of a “broadly flat to negative” market.

The “overconsumption of goods” is now leading to a “sharp correction” in demand, the Danish company said in a report. Its key market China is struggling and many emerging markets are “vulnerable,” as they enter the slowdown with high debt levels, Maersk added.

“With economic activity slowing and supply chain bottlenecks easing during 2022, businesses started to accumulate inventory resulting in a drag on trade activity,” it said. Volumes in its Ocean segment fell 14% in the final three months of last year from the same period a year earlier, with the decline seen across most ocean routes, the company said.

Maersk’s underlying earnings before interest and tax could be as little as $2 billion in 2023 compared with $31.2 billion in 2022, the company estimated. It also expects to book a restructuring charge of $450 million on its brands in the first quarter.

“We believe that this guidance reflects the substantially lower container freight rates going into 2023 but also very low visibility in the container market outlook,” Brian Borsting, a credit analyst at Danske Bank A/S, said in a note. “Furthermore, the CEO just took office — hence likely to be slightly conservative on the 2023 outlook in our view.”