On Wednesday, Maersk (CSE: MAERSKa) shares dropped over 5 per cent in early trade after the world’s largest container shipping company warned that its main shipping business is slowing sharply as the pandemic boom finally fades.

The company said that it is clear that freight rates have peaked and started to normalise during the quarter, driven by both decreasing demand and easing of supply chain congestion.
The Baltic Dry Index has been down by over half since May and over 75 per cent from its 2021 peak.

Maersk’s warning reflects an inevitable global trade and shipping slowdown after the pandemic triggered a massive structural shift in global consumer spending. The increased demand for durable consumer goods put huge premiums on containers and shipping capacity that have only recently started to unwind.

Against that backdrop, the Danish group cut its forecasts for global container demand this year and now sees a drop of between 2 per cent and 4 per cent. Coming so late in the year implies a disproportionately sharp decline in demand in the final part of 2022.

Earnings and revenue again beat the company’s and the market’s forecasts in the third quarter, with revenue rising 37 per cent on the year to USD 22.8 billion, earnings before interest and taxes rising 61 per cent to USD 9.5 billion, and free cash flow increasing 47 per cent to USD 7.8 billion.

Maersk is increasingly diverting resources to grow its land-based logistics arm. Solid growth in the third quarter, with revenue rising by over 60 per cent to top USD 4 billion for the first time, thanks to the consolidation of newly-acquired LF Logistics.