AP Moller Maersk, the largest container shipping company in the world, has announced that global container trade decreased by nearly 5% in Q1 2020 due to the COVID-19 pandemic.
Container trade is responsible for the majority of retail goods shipping worldwide, therefore, the industry serves as an indicator of the global economy. Unfortunately, the current outlook is not positive.
Maersk’s recent trading update revealed that almost 10% of its fleet is currently unused, a rate not seen since the global financial crisis in the late 2000s.
The outlook for the rest of the year is not optimistic either. CEO of AP Moller Maersk, Soren Skou, told CNBC,
“We expect to see a significant decline in demand for Q2, possibly up to 20% to 25%.”
Maersk elaborated on this in its trading update:
“Although the forecast is uncertain,” it stated, “container demand is expected to decrease in 2020 compared to 2019.
“It is currently difficult to predict when and how global trade volumes will recover, as it depends on the interaction between the virus and government policies regarding the economy.”
The question is how the shipping industry will handle the decrease in demand for traded goods. During the financial crisis a decade ago, major players engaged in a price war to sustain their businesses in a shrinking market.