Asia-Europe trade volume set to slow in third quarter, says Maersk
Trade volume between Asia and Europe is expected to grow at a slower pace this quarter after the effect of inventory restocking which boosted business in the second quarter fades away, said Nils Andersen, the chief executive of AP Moller-Maersk Group.
"Due to the factor of inventory refilling, imports into Europe were surprisingly strong in the second quarter with 9 per cent volume growth on the Asia-Europe trade lane, much above expectations given the economic performance. So going forward, we expect growth to be less strong," Andersen said of the firm's second-quarter earnings.
The Danish shipping and energy giant posted a 34 per cent rise in underlying profit year on year to US$1.3 billion. If one-off items are included, net profit rose 156 per cent to US$2.3 billion.
Maersk Line, the firm's flagship container shipping division, raked in US$547 million profit, up 25 per cent from the year-ago level due to higher trade volumes and fuel-saving measures.
"Imports into US are weaker than expected, given all the positive news from the US. But on the back of a poor first half, we expect figures to improve in the second half," Andersen said.
There is reason to be sanguine about trade demand from the euro zone, where gross domestic product growth was flat in the second quarter, according to Frode Mørkedal, an analyst at RS Platou, a ship and offshore brokerage and investment bank.
"History shows that with 1 per cent GDP growth in the euro zone, import volumes would grow 6 to 7 per cent. At least the expectation is still that euro zone GDP would grow 1 per cent this year, so it is still positive," he said.
AP Moller-Maersk raised its profit outlook by 12.5 per cent to US$4.5 billion for this year.
Andersen was also optimistic on obtaining regulatory approval from China of 2M, the proposed vessel sharing agreement with Mediterranean Shipping.
"Based on historical behaviour, our interpretation now is [the Chinese authorities would not block 2M], but to say 'never' or 'under no circumstance', I don't think that is an answer that anyone can give," he said.