What is Happening?
Maersk transports almost 1 in 5 containers worldwide, shipping everything from clothing to components for trains and washing machines.
However, the coronavirus epidemic has unbalanced global container shipping trade as global supply chains and factory activity in China and across the world has been disrupted.
"As global demand continues to be significantly affected, we expect volumes in the second quarter to decrease across all businesses, possibly by as much as 20%-25%," Chief Executive Soren Skou said in a statement.
Maersk said it had cancelled more than 90 sailings, or 3.5% of total shipping capacity in the first quarter to deal with the slowdown in trade and keep freight rates from falling.
Impact on Retail & Ecommerce:
- While some retailers impacted by lockdown closures had asked Maersk to delay shipments, others like Amazon were growing volumes and asking for even quicker deliveries via rail or air freight.
- To meet demand for e-commerce shipments, which have been impacted by the halt of commercial air traffic, Maersk had launched a new service where it loads small packages on a container vessel in China and ships them to Los Angeles for further distribution.
What Does it Mean?
Given Maersk is on the front line of global commerce, bad news for shipping is not a good sign for global trade and the economy of the world.
🤔 Despite record use of its app, lower oil prices and stable freight rates, the company sounded largely uncertain on the rest of 2020 and moved to adopt a 'one quarter at a time' approach.
For many merchants, this should signal a need to remain dynamic and be prepared to adjust stock, pricing, and product in order to more closely match customer demand and the ability to fulfil orders.