The Largest Shipping Company Marking the Stagnation Line: "Positive Signs by Mid-Year"

"By the middle of the second quarter this year, we will be able to see positive signs."

Soren Toft, CEO of Swiss MSC, the world's largest shipping company, appeared on the US economic broadcast CNBC on the 1st (local time) and said, "I am optimistic that the global economy will recover," drawing a line against recession forecasts. MSC is the largest shipping company with a fleet capacity accounting for 17.5% of global container transport and is also regarded as a barometer of world trade.

[Image source=AP Yonhap News]

CEO Toft said, "By mid-year, we will be able to confirm trade movements," forecasting growth in the maritime container market in the second half of the year. He pointed out that there is still a large inventory in North America and Europe, and predicted that as this inventory is depleted, cargo transport volume will also rebound.

He especially emphasized that shipments from China to Europe are increasing, which is seen as a signal of consumer demand. He explained, "We are currently seeing healthy volumes from China to Northern Europe. We are looking at and expecting this trend to continue for the next few months." Earlier released Chinese Manufacturing Purchasing Managers' Index (PMI) also exceeded the baseline of 50, indicating an expansion phase. The February manufacturing PMI was 52.6, the highest since April 2012.

He also gave a positive evaluation of the US economy. CEO Toft said, "I still view the US very positively," adding, "Inflation has been able to be reduced slowly, and the labor market is very strong. It is basically a state of full employment." Maritime freight rates, which had acted as an upward pressure on commodity inflation, have recently fallen back to pre-COVID-19 levels.

Despite the sharp decline in maritime cargo causing difficulties for shipping companies, MSC aggressively expanded its fleet and surpassed Denmark's Maersk, the industry leader, to become the world's largest shipping company. The dissolution of 2M, the world's largest shipping alliance with Maersk since 2015, was also recently formalized.

CEO Toft said, "I do not think the era of alliances is over," adding, "Maersk wanted to go on a different path, and that is their right." He also said, "(The dissolution of 2M) does not mean we will not cooperate with anyone in the future," adding, "Certain alliance forms are possible on some routes." He emphasized that the shipping alliance with Maersk provided benefits to customers and improved efficiency.

Furthermore, he diagnosed that the importance of Southeast Asia in the supply chain is increasing. In response to the question of whether the era of globalization is ending, he said, "Not at all," and evaluated that more regionally diversified supply chains will be possible in the future.