China’s trade growth accelerates in Sept; exports up 9.9%

 


The world's biggest container shipping line, Maersk MAERSKb.CO, said on Tuesday demand was recovering faster than expected and lifted its earnings outlook, while also announcing plans to cut 2,000 jobs as it streamlines to cut costs.

FILE PHOTO: A Maersk ship and containers are seen at the Port of Santos, Brazil September 23, 2019. REUTERS/Amanda Perobelli

Maersk, which handles about one in five containers shipped worldwide, said that though cargo volumes were still down on last year they had picked up more than forecast after falling sharply at the height of the coronavirus pandemic a few months ago.

“A.P. Moller - Maersk is on track to deliver a strong Q3 with solid earnings growth across all our businesses, in particular in Ocean and Logistics & Services,” Chief Executive Soren Skou said in a statement.

“Volumes have rebounded faster than expected, our costs have remained well under control, freight rates have increased due to strong demand,” Skou said.

Volumes in Maersk’s Ocean-division declined by around 3% in the third quarter compared to the same period last year, above an expected mid-single-digit contraction, the company said.

The Danish company said it would cut 2,000 positions as a result of a major reorganization announced last month, where it seeks to integrate its seaborne container and in-land logistics businesses.

Maersk currently has around 80,000 employees.

Shares in Maersk were down by around 1% on Tuesday morning.

The company expects restructuring costs of around $100 million in the third quarter related to the redundancies.

Maersk said it now expects full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $7.5 billion to $8.0 billion before restructuring and integration costs, up from an earlier range of $6.0 billion to $7.0 billion.

Preliminary results for the third quarter showed revenue at $9.9 billion, while EBITDA before restructuring and integration costs came in at $2.4 billion, Maersk said.

China’s trade picked up in September as global demand for masks and medical supplies boosted exports and the economy’s early reopening gave producers an edge over foreign competitors.

Exports rose 9.9% over a year earlier to $239.8 billion, up from August’s 9.5%, the fourth straight month of growth, customs data showed Tuesday. Imports gained 13.2% to $202.8 billion, up from the previous month’s 2.1% contraction as the world’s second-largest economy regained momentum.

Exports had a “comprehensive recovery” in the three months ending in September, said a spokesman for the customs agency, Li Kuiwen. He said China has exported masks and other medical supplies worth 1 trillion yuan ($150 billion).

China has “successfully filled the global supply shortage,” Li said at a news conference.

Chinese exporters have benefited from the relative early end of travel and trade curbs after the ruling Communist Party declared victory over the outbreak in March. They are taking market share from foreign competitors that are hampered by anti-disease controls.

“Renewed virus outbreaks in trading partners will be a challenge, but shipments of products benefiting from virus-related demand should continue to hold up,” Louis Kuijs of Oxford Economics said in a report.

China’s global trade surplus swelled 6.6% over a year earlier to $37 billion but was down sharply from August’s $58.9 billion gaps, thanks to higher exports.

Exports to the United States rose 20.5% over a year ago to $44 billion despite higher U.S. tariffs in a fight with the Trump administration over Beijing’s technology ambitions and trade surplus. Imports of American goods rose from 24.5% to $13.2 billion.

China became the first major economy to rebound to pre-virus growth levels in the second quarter of the year when the government reported 3.2% economic growth over a year earlier. Forecasters expect that to accelerate in the three months that ended in September.

Automakers and other large manufacturers are back to normal activity, helping to drive demand for imported iron ore, copper, and other industrial materials.

Importers are meanwhile benefitting from a slump in prices of oil and other commodities due to weak demand.

Retail sales remain subdued as consumers who are uneasy about possible job losses put off major purchases. Consumer spending returned to pre-virus levels in August but was only 0.5% above a year earlier.

Economists have warned some Chinese exporters of smartphones and other high-tech goods might face trouble due to restrictions imposed by Washington on their access to U.S. components on security grounds.

Washington has cut off supplies of components for companies including China’s most prominent tech brand, Huawei Technologies Ltd.

The Trump administration is lobbying European and other allies to avoid Chinese suppliers as they upgrade to next-generation telecom networks. That could weigh on exports of technology products Beijing is promoting to propel economic development.