Global Danish shipping giant Maersk has joined the chorus of major companies warning of the US-China trade war’s negative implications.
Maersk is ringing the alarm bells after netting second quarter earnings which beat expectations. However, it doesn’t look like the rest of the year will be smooth sailing for the shipping giant. Maersk warns that the escalating trade war between the world’s two largest economies will likely limit growth in global container traffic down to the lower end of their 1%-3% guidance range for 2019. New tariffs imposed on about $300 billion worth of Chinese goods represent a threat to the shipping industry, when combined with China’s inevitable reaction and further tariffs scheduled by the US for later this year.
Despite the bad news, Maersk CEO Soren Skou remains optimistic, saying “It is not tariffs that decide how many goods are being transported, but rather how much Americans buy when they go to Walmart. Luckily for us, the US consumer is still in a good mood.” Indeed, tariffs only hurt the shipping industry insofar as they deter the end consumer from purchasing goods which were subjected to tariffs. Maersk isn’t in clear waters yet, but the company has benefited from high container freight rates, lower costs, and larger volumes. The pertinent question for Maersk right now is whether or not jittery investors will keep the company’s stock healthy during a concerning time for the global economy.