The chief executive officer of the world’s biggest shipping line says he’d like to meet with U.S. President Donald Trump to explain the merits of free trade.
Soren Skou, the CEO of A.P. Moller-Maersk A/S, delivered a set of quarterly results on Thursday that show his company has so far managed to ride out the trade war that’s raging between the U.S. and China. But he also warned that the outlook remains uncertain, with little sign of a deal being struck between the world’s two biggest economies any time soon.
Speaking at a press conference in Copenhagen on Thursday, Skou said that “it’s the U.S. which has built the free trade system we have today, and I would like that we get back to that.” He also noted that Maersk handles about a tenth of the U.S.’s container trade, and that the company is an important customer of the country’s armed forces.
Maersk used its second-quarter results to reassure investors it can keep its full-year profit outlook, as it did better last quarter than analysts had expected thanks to continued solid demand among consumers.
The shares jumped over 7% when the market opened in Copenhagen, then dropped in the middle of the trading day after China said it was ready to take retaliatory steps against the U.S. for its latest tariffs. Maersk recovered later in the day and was trading about 0.9% higher by 3:30 p.m. local time.
Speaking to Bloomberg Television, Skou said that that despite the trade stand-off between China and the U.S., Maersk has been able to “manage the situation quite well.”
“For our business, what decides demand, that’s not tariffs. That’s the consumer and consumer spending. The U.S. consumer is in a relatively good mood. Salaries are increasing. Confidence still remains relatively good,” Skou said. “Global demand has grown so far,” and “we expect that to continue for the rest of the year.”
The company, which controls a fifth of the globe’s container fleet, reported an operating profit, or Ebitda, of $1.36 billion, beating the average analyst estimate of $1.24 billion. Maersk said synergies of $1 billion from combining its container transport activities came sooner than expected, which drove profit in the quarter. Click here for more on the earnings.
Maersk said global container trade grew by around 2% in the quarter from a year earlier, which is in line with its expected full-year growth of 1-3%. The development shows that the “soft momentum” continued from the first quarter, “reflecting a broad-based slowdown in all the main economies. Negative effects from escalating trade restrictions also weighed on trade growth,” the company said.
As to the prospect of resolving the current trade tensions between China and the U.S., Skou said that, “right now, there’s not much that suggests a deal will be done anytime soon, as far as we can see. It seems to be going in the other direction.”
What Maersk says about tariffs:
“The previous trade restrictions, imposed during 2018 and mainly led by the U.S. and China, have reduced bilateral trade between the two countries, and it also led to shifts in trade structures. So far, U.S. importers have shifted imports away from China to other countries such as Vietnam, Korea, Thailand, India and Mexico. The impact of the newly imposed tariff hike is expected to be significant for the U.S.-China bilateral trade and could in isolation remove up to 0.5% of global container demand in 2019 and 2020, and when US tariffs on additional $300 billion is implemented later in the year, it could result in a reduction of up to 1% in 2020.”
