Maersk CEO Clerc Is Bullish On China Despite Weaker Than Expected Rebound

by John Konrad (gCaptain) Vincent Clerc, the newly appointed CEO of AP Møller-Maersk, spoke about China’s economic rebound during his visit to the country this week. He pointed out that the rebound has been weaker than expected due to pandemic-led disruptions and a real estate meltdown that occurred in 2022 but despite China’s modest growth target of 5% this year, trading volumes associated with the Chinese economy have remained resilient, and there has been little impact from US-led efforts to “decouple” from China. In addition, Clerc mentioned he will further strengthen Maersk’s investment in China and signed a new green energy partnership in Shanghai.

“When we started the year, there was this hope that as China reopens after Covid we would see a really strong rebound,” Clerc said at the PRC’s annual China Development Forum conference. “I think we’ve not seen it yet.”

Profits at Chinese industrial groups fell 22.9% in January-February, stressing concerns about the economy’s recovery. While many economists hope for a better performance after China abandoned its Covid-19 controls in December, Clerc noted that the Chinese consumer is not in a splurging mood right now. China’s negative mood has been compounded by geopolitical tensions with the US, as well as a government crackdown on leverage in the real estate market. According to Clerc, 70% of Chinese savings are in real estate, which has been hit hard by the government’s actions.

Maersk has gained greater exposure to China’s domestic consumer market through its $3.6bn acquisition of Hong Kong-based LF Logistics in 2021. The Danish group is seeking to expand beyond its core shipping line business into markets ranging from e-commerce to road and air freight.

“We are relatively optimistic about the Chinese economy for 2023” Clerc said in an interview with Xinhua news. “Today we have a significantly larger presence in China than we did before the pandemic.”

Clerc added that there was no serious decoupling with the global economy beyond the high-tech sector, which accounted for only a fraction of the volume of China’s exports and imports. He said, “In a way, China has never traded as much with the rest of the world as it did last year, and at the same time we are talking about decoupling so I think it’s a really interesting contrast.”

Maersk has forecast that underlying profits will fall this year to between $2bn and $5bn, down from the record $31bn it made last year during the pandemic-led boom. Despite the challenges, Maersk remains committed to the China.

Maersk Signs Green Methanol Agreement With Shanghai Port

Maersk also announced that Clerc has signed an MOU with Shanghai International Port Group (SIPG) to develop a strategic partnership for a green methanol fuel bunkering project. The two companies will work together to explore green methanol fuel vessel-to-vessel bunkering operation after Maersk’s green methanol container vessels are delivered in 2024.

“Through joint efforts, we can provide low-carbon logistics service for our customers, also contributing to China’s pledge to be carbon neutral by 2060,” said Clerc. “We are very pleased to form this partnership with Shanghai.”

The partnership will help Maersk achieve its net-zero emissions target for 2040 across the entire business. Maersk says the agreement with help Shanghai become one of the world’s first commercial green methanol refueling points and a regional green methanol fuel bunkering center. The two companies will deepen their cooperation in stages, beginning with the services of vessel-to-vessel bunkering and fuel tank storage at port, with potential plans to explore an all-around energy strategic partnership in the future.

CNBC Video

China CGTN News Interview With Clerc