Customers are continuing to face a raft of challenges as the Russia-Ukraine conflict weighs on the longer-term outlook for the global economy amid concern that inflation and higher energy prices will lead to lower consumer demand, damaging international trade. The short-term, however, is more positive. Cargo volumes through Shanghai are returning to pre-lockdown levels and demand from US consumers is pulling forward the peak shipping season on North American trades. Maersk continues to do its best to mitigate the impact of on-going port congestion, with the deployment of extra loaders where possible, the rescheduling of services and in New Zealand, the launch this month of our Coastal Connect service to improve port connectivity.
The Russia-Ukraine conflict and the ensuing sanctions imposed on Moscow are adding to inflationary pressures globally and raising fears of a possible recession. The situation is adding pressure on central banks to tighten monetary policies including increasing interest rates. Key to the outlook for trade is how consumers and businesses react to the elevated uncertainty, higher prices, and policy changes. In the near-term, global expansion will continue, supported by pent-up demand and the re-opening of economies. But longer-term, substantial monetary policy tightening will increasingly weigh on economic activity with additional concerns about the outlook for China which has COVID-19 led economic consequences. Potential scenarios depend heavily on the path of inflation and the geopolitical fallout from the war in Ukraine.
Global trade volumes declined by 2.5 percent in May compared with a year earlier and year-to-date growth is down by a similar level, although these come off last year’s elevated levels. Container imports into Europe were negatively impacted by the Ukraine conflict as volumes following the imposition of sanctions and a broader weakening in demand. Imports into Asia were depressed due to COVID-19 lockdowns in China and a general slowdown in China’s housing market. Imports into North America were stable at a very high level. The outlook remains highly uncertain, and we mainly see downside risks to our base scenario.
Shanghai situation: With Shanghai gradually returning to normal after the two-month city-wide lockdown in April and May, factory production is picking up and demand rebounded nicely in July with positive signs of a seasonal peak on many trades. Trucking in the city area has also been fully restored. Intra-provincial trucking is also back to pre-lockdown levels although truckers are subject to local testing requirements. The current situation is dynamic and subject to change, so we suggest you check with your local Maersk team for the latest information.
“The situation in Shanghai is normalizing but is still both fluid and hard to predict – this combined with the strikes in Europe and the continuous congestion in the ports in North America means that our customers have a larger need for flexibility and agility than ever. Our focus is on delivering just that to help support the fulfilment of their customer promises”, explain Anne-Sophie Zerlang Karlsen, Head of Asia Pacific Ocean Customer Logistics.