Maersk, world’s largest integrated shipping and logistics solution, reported an almost flat growth in worldwide demand at 2% in the second quarter from a year earlier yet the shipping giant isn’t worried, says an article published in the Economic Times.
Importers Moving To Other Geographics
A slowing global economy and trade wars between countries have created a lot of uncertainty across the world, but according to Sriram Narayanasami, VP Commercial, Maersk, it may not be all doom and gloom. “What is happening with the whole situation with trade is that we fear it will impact us, but it probably hasn’t impacted us [Maersk] to the extent that we had feared. The importers are moving to other geographies, for example from China they are moving into Vietnam, Indonesia and to the rest of Asia, which helps shipping in a way.”
Maersk Managing Well?
Maersk, world’s largest integrated shipping and logistics solution, is a bellwether for global trade as it controls a fifth of the globe’s container. In its recent earnings the company reported an almost flat growth in worldwide demand at 2% in the second quarter from a year earlier. Chief Executive Officer Soren Skou said the company is managing the trade turmoil quite well so far, Bloomberg reported.
A Healthy Recession?
“After ten years of growth you are going to see a cyclical blip. Let us hope it is a cyclical blip and not a deep recession. Even if we do get a bit of a recession I think it is healthy because it is the recession that cut out the waste, makes the companies leaner and gets them battle fit for the next five or seven years. All the actions that we have taken during tough times have actually made us battle ready for the following period. So over a medium to long term I still remain very sanguine,” says Narayanasami.
Take it with a pinch of salt?
However, optimism is being increasingly taken with a pinch of salt as global trade is roiled by uncertainties and geo-political tensions. In fact Maersk also acknowledged the fact any new imposition of tariffs on China by President Donald Trump could take trade tensions to even greater heights. “The impact of the newly imposed tariff hike is expected to be significant for the U.S.-China bilateral trade and could in isolation remove up to 0.5% of global container demand in 2019 and 2020, and when U.S. tariffs on additional $300 billion is implemented later in the year, it could result in a reduction of up to 1% in 2020,” the company is reported to have said during its quarter earnings and as reported by Bloomberg.
Going through cyclical blip
Narayanasami views India going through a possible cyclical blip, where the economy is growing, albeit at a slower pace. “We are coming on the back of a ten year of globally coordinated growth of which India has also grown significantly. Economies go through a cyclical blip and I certainly think that at least in India we are going through a possible cyclical blip. We are growing lesser than usual, but we are still growing.”
Narayanasami added that certain sectors may have challenges, for example auto, which seems to be facing a slowdown, but the long-term growth story is largely intact. “If we get into our demographics, it is going to last next 35 years. We have a larger proportion of working people over the next 30 years as compared to ever before,” he added.
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Source: Economic Times
