The US-China trade war is not yet having an effect on the US consumer, according to Soren Skou, CEO, A.P. Moeller – Maersk (Maersk), the largest container shipping line in the world by market share.
In a series of three videos concerning Maersk’s second quarter (Q2) financial results, which PTI reported on yesterday, Skou has gone into detail on tariffs, the IMO’s 2020 regulations on sulfur emission and the carrier’s business transformation.
The US and China, the two biggest economies in the world, have imposed approximately US$400 billion on each other’s goods since early 2017 in a trade dispute which has had repercussions throughout the global supply chain.
PTI reported in July 2019 how US President Donald Trump claimed the US was “winning” the trade war as he suspended the use of fresh tariffs on Chinese goods as the two sides opened talks on a potential free trade deal.
In its Q2 financial results, Maersk reported a positive bounce in profits but maintained its warning over the effect of the trade war on the world economy.
“Trade between the US and China is way down,” Skou said in Maersk’s video, “but exports from the rest of Asia to the US are way up. In fact, US imports grew to 0.5% last quarter.”
The Pacific region in general, according to Skou, has grown by approximately 1% and there is also anecdotal evidence of the US circumventing of the tariff; the decline of the Chinese currency has also had a positive effect.
“But at the end of the day,” Skou goes on, “what really matters is the impact of the tariffs on the US consumers.
“So far, it has been minimal. The US consumer is still spending, and we are still shipping.”
Furthermore, Skou believes the upcoming IMO regulations to limit a vessel’s sulfur output to 0.5% of its fuel, will create a “level playing field” for container shipping.
The regulations, which were agreed in 2013, are due to come into force on January 1, 2019. They are one of the most pressing issues in the container shipping industry and have pushed many carriers to pursue environmentally friendly alternatives, such as liquefied natural gas (LNG).
As well as that, Skou also touches on Maersk’s strategic transformation, which has seen it integrate its customer experience and begin the task of diversifying its business operations.
The transformation, which was launched in February 2018, is expected to be completed in five years and will see the restructuring of its energy business and wider logistics services. One of the first big steps was to acquire fellow carrier Hamburg Sud April US$4 billion.
“In the last couple of years, we have done a lot,” Skou said.
“We have separated the oil and energy-related businesses. We have acquired and integrated Hamburg Sud.
“We have solved some of the long-standing issues that would detract us when it comes to customer satisfaction.
“We need to grow organically, we need to make progress on all the Logistics & Services’ products, whether it is inland, custom-house brokerage, RCM, cold chain and so on.”