Economy

“Bleak” Outlook for Container Shipping Is Bad News for the Global Economy

Maersk container ship
Courtesy Maersk Line
The world’s largest container shipping group, Denmark’s A.P. Moeller-Maersk, expects shipping demand on routes between Europe and Asia to be “bleak” in 2013, leading to a very small increase in overall shipping demand of 4% to 5%. While that will weigh down the entire industry, a lack of demand for container shipping often serves as a bellwether for international trade and, to some degree, the global economy.

The main problem for Maersk and other major container shippers is overcapacity, which is driving down rates. The industry solved the problem in 2012 by raising freight rates, but now that Maersk and the others are turning a profit, shippers are unlikely to grant them further rate increases with so much capacity going unused. More likely are demands for cuts in freight rates.

With demand rising at about half the rate that new vessels are adding to capacity, container shippers indeed face a tough year ahead. But the significance of the weak outlook spreads much further and does not augur well for a global economic recovery this year.

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Get started right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.