SIMIC

DANISH shipping giant Maersk, recently demoted from No 1 to No 2 as the world's biggest container carrier, warned of a steeper decline in global consumer demand than most expect, reports Reuters.

Maersk, displaced by the Italian Swiss Mediterranean Shipping Company (MSC), still has a market share of 17 per cent, but now expects that to shrink four per cent, having recently forecast a decline of 2.5 per cent.



Maersk CEO Vincent Clerc said he saw no sign that the destocking which has curbed global trade activity would end this year.



"We had expected customers to draw down inventories around the middle of the year, but so far we see no signs of that happening. It may happen at the beginning of next year," Mr Clerc said at a media briefing.



"Consequently, the uptick in volumes we had expected in the second half of the year has not occurred," he said, adding that reducing inventories would take longer in the US than elsewhere.



To make things worse for the industry, a wave of hundreds of new container vessels ordered during the pandemic has started to come to market this year.



"Most of the orders are still in the shipyard, so we have a long haul in front of us," said Mr Clerc.



The industry has been disciplined in handling the new capacity, which has so far prevented a larger plunge in freight rates, he said.



"Whether that will continue, only time will tell," he said. "We will need to adapt to the new market situation over the next 18 months."



According to PYMNTS research, 74 per cent of consumers have cut back on nonessential retail purchases to make ends meet, which is likely to have a strong impact on container demand from retailers.



The National Retail Federation lowered its U.S. consumer good import forecast for first half of 2023 in May, with the expectation that incoming ocean container volume will remain soft going into the autumn months when retailers like Walmart begin preparations for the holiday season.