Inflation-stoking supply crunch set to ease in second half

A major player in global trade signaled disrupted supply chains rattling economies from Vietnam to Germany may return to normal within months.

A major player in global trade signaled disrupted supply chains rattling economies from Vietnam to Germany may return to normal within months, easing concerns of a more protracted period of shipping chaos that has helped fuel inflation, wreaked havoc on retailers and slowed factory production.

Ship backlogs that have persisted for most of the COVID-19 pandemic will begin to let up in the second half, A.P. Moller-Maersk A/S said Wednesday. Such a shift will alleviate pressure on container capacity but will mean less revenue for the Danish shipping giant from the spot market, where freight rates on the busiest routes remain as much as 10 times higher than 2019 levels.

“We are guiding in an environment where we are coming out of a pandemic, and we don’t have much experience with that to be honest,” Chief Executive Officer Soren Skou said in a Bloomberg TV interview. “So we are saying we expect quite a strong first half of 2022, and then we expect what we call a normalization early in the second half.”

That view added a glimmer of optimism in an industry bogged down by labor shortages, port congestion and COVID-related disruptions. The outlook also hinges on a big unknown: whether household demand for goods -- elevated throughout the pandemic -- will be sustained when the virus fades and spending in services returns to normal. About 80 per cent of global trade volumes move on the sea.

Maersk, which handles almost one-fifth of the world’s ocean container traffic, said it sees a 2 per cent-4 per cent expansion in the market this year, with a strong first half followed by an uncertain outlook from there.