Trade off
The business news that matters
Hello everyone and welcome to the latest Off to Lunch…
The global shipping giant AP Moller-Maersk has warned of a downturn in global trade. The company said in a statement this morning that global container volume - the volume of containers moved around the world - is now expected to fall by between 1 per cent and 4 per cent this year. This compares to a previous forecast range of 0.5 per cent growth to a 2.5 per cent decline.
Maersk said there was “continued destocking” by businesses around the world. It added: “The inventory correction observed since Q4 2022 appears to be prolonged and is now expected to last through year-end.”
Maersk’s comments are important because it is a bellwether for trade and the global economy. Rising prices and demand in the shipping industry was one of the first signs that inflation was set to surge as the Covid-19 crisis ended. The latest forecast suggests that inflation will ease but that the global economy is weakening.
Vincent Clerc, chief executive of Maersk, told the Financial Times:
“We are in the midst of the biggest correction after the Covid boom of 2021 and 2022.”
Clerc also told Bloomberg TV that while the company wasn’t expecting a global recession it was expecting “a really subdued environment”. He added:
“There’s a lot of moving parts right now, from rate hikes and the risk of recession.
“Uncertainty also about GDP growth in China and what demand is going to be in China next year.”
You can find the FT story here and the Bloomberg story here
Maersk shares are traded in Copenhagen and it is valued at roughly £27 billion. Maersk is the second largest container ship company in the world behind the Mediterranean Shipping Company. However, the share price graph below shows how the value of the company has fallen as the post-Covid boom in trade has eased. Shares in Maersk have fallen another 4 per cent today…
Maersk made the new forecast as the company published its quarterly results. Those results show that revenue fell 40 per cent year-on-year to $13 billion (£10.2 billion) in the second quarter of 2023 while underlying profits fell 72 per cent to $2.95 billion. You can find the results in full here
Other stories that matter…
1. Advertising giant WPP has warned that revenue will grow less than expected this year because technology groups in the US are spending less on marketing and the Chinese economy is weakening. Shares in the company have fallen by more than 7 per cent on the news. The company made the warning in its latest half-year results, which you can find here
2. Amazon and Apple posted their latest quarterly results last night. Amazon said revenue grew 11 per cent year-on-year in the second quarter of 2023 to $134.4 billion (£105.8 billion) while operating profit more than doubled from $3.3 billion to $7.7 billion. Shares in Amazon are up more than 8 per cent in pre-market trading on the back of the results, which you can find here. Apple sales fell 1 per cent to $81.8 billion while operating profit dropped slightly from $23.1 billion to $23 billion. But Apple also said it now has more than 1 billion subscribers around the world paying for its services, including Apple Music, Apple iCloud and Apple TV+. Results here. Shares in Apple are down 2 per cent in pre-market trading.
3. An interesting column from Harry Wallop in The Times about what all businesses can learn from firms that have been around for hundreds of years. He writes about members of the UK’s Tercentenarian Club, a collection of 14 businesses that have been around for more than 300 years and are still owned by the family that started them. One of the members is the wine group Berry Bros & Rudd. Lizzy Rudd, chairman of Berry Bros & Rudd, said the key to the business succeeding for so long has been thinking in decades, trying to make a positive impact, and luck. Column here
4. Tim Harford has provided some productivity tips for managers in his latest Financial Times column. These are: looking further ahead with your to-do list so you are comfortable about what is coming, clarify your thoughts and make quicker decisions, and accept that you’ll never clear the decks and always have tasks to deal with. Piece here
5. Ofcom’s latest annual report on media habits across the UK shows that the amount of time people spend watching traditional television is falling at a record pace and one in five adults now listen to a podcast every week. Report here
And finally…
Chef Tom Kerridge is presenting a new documentary series on BBC that is taking a look at the stories behind the hospitality industry and putting the spotlight on interesting businesses across the UK. Episode one focuses on restaurants trying to win and maintain Michelin stars, revealing the skill, obsession and determination behind the chefs leading those businesses.
Kerridge visits The Old Stamp House in Ambleside, Cumbria (the best fine-dining restaurant in the world according to Tripadvisor), the vegetarian curry house Prashad in Drighlington, Yorkshire and his own pub The Hand and Flowers in Marlow, Buckinghamshire. One of the stand-out moments in the show is Ryan Blackburn, the owner of The Old Stamp House, revealing he reads every online review about his restaurant and goes online multiple times every day to find them.
You can find The Hidden World of Hospitality with Tom Kerridge here. Between this series and The Bear, the skill, passion and stress of working in the hospitality industry is getting some attention right now…
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Best
Graham