Globalisation is not unravelling but the era of ever greater reductions in barriers to trade is at an end, according to one of the shipping world’s top executives.
Søren Skou, chief executive of AP Møller-Maersk, the world’s second-largest container shipping group, told the Financial Times that he saw little evidence of US or European manufacturers bringing production back home. Instead, they were looking for additional suppliers around Asia.
“Global trade is where it is. It’s going to grow more or less with GDP,” he said. “It’s not liberalising more, so we’re not going to see [even] more growth. It’s also not going sharply in reverse.”
The comments from the Maersk boss, whose company is a bellwether for global trade as it transports more than one in six containers across the oceans, contrast sharply with the gloom of many business executives who believe globalisation is under attack, particularly from populist politicians. Last month data provider Sentieo found that mentions of nearshoring, onshoring and reshoring in company results meetings and investor briefings were at their highest level since at least 2005.
Skou acknowledged the impact of populist political movements and the lack of new trade deals in the US but underscored that he saw no dramatic shift in supply chains.
“We don’t see our customers moving production back to Europe. They’re spreading it around in Asia,” Skou said. “It’s very difficult to see in the short term or maybe even the mid term that you will see a dramatic change in the way the world produces consumer goods.”
Maersk is expecting container shipping volumes to be lower in the first half of this year as world economic growth stalls. But thanks to record freight rates, congestion in ports and supply chain woes, the Danish group is forecasting record earnings in 2022.
Skou said that container shipping could soon be hit by a sharp reversal of the factors that have led to it booming since the end of the first wave of the coronavirus pandemic. He added that there could be a “bullwhip effect” where demand contracts and supply increases, after almost two years of the opposite phenomenon during which shipping groups were unable to respond to a surge in consumer spending. “When it happens, it could go quite quickly,” he added.
He said it was unlikely to happen at the beginning of the second half of the year — as Maersk had previously assumed — but could happen in August or later in the year. “I don’t want to say I’m afraid of it,” he said, pointing to an increase in long-term contracts in container shipping and a rapidly growing logistics business on land.
Skou also made his first public comments on a MeToo scandal that has roiled Maersk and lifted the curtain on abuses of female seafarers in a male-dominated sector after a former cadet claimed she was raped on one of the company’s vessels.
Maersk’s chief executive said that “imagining that can happen on one of our ships is absolutely horrible”. He said the company had known about the alleged rape for almost a year, and had since introduced new policies to ensure that there was always more than one woman per vessel and that the boat’s captain and chief engineer received suitable training.
Maersk employs 350 female seafarers out of a total of 12,000 on its vessels. The International Maritime Organization estimates that women make up just 1.28 per cent of the global seafaring workforce — or roughly 24,000 seafarers. These crew remain on board for two months or more, and during the pandemic many were at sea well beyond the end of their contracts as ports refused permission to disembark.