The world’s largest shipping group, Maesrk, hits Europe with news of a looming economic recession on Wednesday, 2nd November 2022. Maesrk has predicted Europe’s economy going into recession and the United States following close behind.
Consequently, a stagflation economy will drive towards a decline in container demand from 2% to 4% this year to 2023.
The warning comes as the shipping company shares plummeted by 4.4% previously but are now down by 38% since its all-time reported highs of 24,920 Danish krone in early January.
The Chief Executive Officer of Maesrk, Søren Skou, commented on the possibility of a declining universal economy due to crippling inflation rates. He said that the global economy is on its way to a recession, with Europe and the U.S. looming recession almost a certainty.
Blaring Signs
Although this year, Maesrk surpassed its last quarter earnings goals from $9.8 billion to $10.9 billion, the company still sees an economic downturn reaching 2023.
Skou explained to the Financial Times that Maestk has succeeded in surpassing its earning expectations, however certain indicators have caused the company to pause in deliberation and this is because the indications depict a future decline for the company. He said that there may be less earnings in the future.
Maersk’s earlier warning guides hoped for an outcome of a 1% decline, or at least +1%; however, due to the Covid pandemic, Freight rates spiked abnormally, and an increase in consumer needs led to jammed ports and unavoidable delays.
Unfortunately, even after the Covid pandemic has somewhat passed, and previous rates have decreased, the cost of shipping containers still surpasses its initial price before the pandemic.
Skou said that freight rates have increased and will be moving back to its normal prices. He said that the change was caused by a decrease in supply chain congestion as well as a drop in overall demand.
He added that the Ukraineans Russia war has led to major Energy problems in European countries. He explained that the global economy is rapidly moving towards a recession, and more unfortunate situations are to be expected.
Skou also commented that these threatening global dilemmas will massively affect consumer purchasing power as a result, also inhibit the growth of global transportation and the demand in logistics.
Eurozone Facilities May Already be in a Recession
During the first imposed Covid 19 lockdown, manufacturing companies in euro areas significantly declined overall operational productivity and activity.
According to a Twitter report by SP Global, Eurozone manufacturing fell from 48.4 to 46.4 – https://t.co/yTFYhKYbUq Reports from data clearly show that the manufacturing economy is in recession, or may enter soon.
Furthermore, Germany and Spain were also hit majorly by inflation caused by Russia’s slash in energy supply.
Living costs and feeding in the UK also skyrocketed. The annual percentage of food price inflation rose 11.6% in just October.
Minor grocery necessities such as milk, sugar and perishable food items rose excessively. Currently, Retail specialists and reports have signaled inflationary tensions are not receding anytime soon.