What's going on?

Maersk, the world�s second-biggest shipping company, warned on Wednesday that its profit�s poised to plunge this year.

What does this mean?

It looks like Maersk has found itself up a creek without a paddle. For two years, the industry could more or less name its price when it came to shipping fees, thanks to a flood of demand and simultaneous supply shortages. In fact, the rising tide was so strong that Maersk upped its profit forecasts twice last year, and with good reason: revenue rose a third in 2022, and operating profit jumped 57% to a record $31 billion. But now it seems shippers are about to encounter the icy waters of reality. With the global economic slowdown in full swing, their fees have slipped to pre-pandemic levels, and shipping demand�s set to sink like an anchor too. No wonder Maersk forecasts an operating profit of as little as $2 billion this year � a calamitous drop from 2022. That was well below analysts’ expectations, and investors staged a mutiny, throwing stock overboard and tanking shares.

Why should I care?

Zooming in: MSC�s at sea.
Maersk’s position as master of the seas was sunk by Mediterranean Shipping Company (MSC) last year, when the plucky firm overtook it as the world�s biggest container shipping company by volume. But while MSC bought more boats, Maersk focused on land-lubber logistics on terra firma instead. Now that the shipping industry�s slowing, Maersk could be glad it swapped some highways of the sea for real tarmac.

The bigger picture: Expect worse.
This shipping slowdown isn’t due to sail off into the sunset anytime soon: a forecast out earlier this month predicted that world trade will grow by a measly annual average of 2.3% through to 2031 � even more slowly than the global economy. That�s no wonder, with geopolitical tensions and war set to make some supply chains more regional � less efficient and more expensive, in other words.