Global trade is not going into reverse, says Maersk boss
Globalization is not unraveling, but the era of ever-increasing trade barriers is coming to an end, said one of the shipping industry’s top executives.
Søren Skou, chief executive of AP Møller-Maersk, the world’s second-largest container shipping group, told the Financial Times he saw little evidence that US or European manufacturers would take production back home. Instead, they were looking for additional suppliers in Asia.
“Global trade is where it is. It will more or less grow with GDP,” he said. “It’s not liberalizing anymore, so we’re not going to see it” [even] more growth. It is also not sharp backwards.”
The comments of the Maersk boss, whose company is a model of global trade because it transports more than one in six containers across the oceans, contrasts sharply with the gloom of many businessmen who believe globalization is under attack, particularly by populist politicians. Last month, data provider Sentieo found that mentions of nearshoring, onshoring and reshoring in corporate earnings meetings and investor briefings were at their highest levels since at least 2005.
Skou acknowledged the impact of populist political movements and the lack of new trade deals in the US, but stressed that he did not see a dramatic shift in supply chains.
“We don’t see our customers moving production back to Europe. They’re spreading it in Asia,” Skou said. “It’s very hard to see in the short or maybe even medium term that you’re going to see a dramatic change in the way the world produces consumer goods.”
Maersk expects container traffic volumes to be lower in the first half of this year as global economic growth stagnates. But thanks to record freight rates, congestion in ports and supply chain problems, the Danish group predicts record profits in 2022.
Skou said container shipping could soon be hit by a sharp reversal of the factors that have fueled a boom since the end of the first wave of the coronavirus pandemic. He added that there could be a “bullwhip effect” as supply and demand increase, after nearly two years of the opposite phenomenon in which shipping groups were unable to respond to a surge in consumer spending. “If it happens, it can go very quickly,” he added.
He said it was unlikely to happen at the start of the second half of the year – as Maersk had previously believed – but could happen in August or later in the year. “I wouldn’t say I’m afraid of it,” he said, pointing to an increase in long-term container shipping contracts and a fast-growing onshore logistics company.
Skou also made his first public comments about a MeToo scandal that sparked Maersk and raised the curtain on abuse of female seafarers in a male-dominated sector after a former cadet alleged she had been raped on one of the company’s ships.
Maersk’s chief executive said that “imagining this could happen on one of our ships is absolutely appalling”. He said the company had known about the alleged rape for nearly a year and had since introduced new policies to ensure there was always more than one woman per ship and that the boat’s captain and chief engineer received appropriate training. .
Maersk employs 350 female seafarers out of a total of 12,000 on its ships. The International Maritime Organization estimates that women make up just 1.28 percent of the global seafaring workforce — or about 24,000 seafarers. These crew members stay on board for two months or more, and during the pandemic many were at sea well past the end of their contracts, as ports refused permission to disembark.