Investor Presentaiton

16 A.P. Moller-Maersk Annual Report 2020 Directors' Report Market update =1 Market update The global economy sharply deteriorated in the spring and early summer of 2020 as a direct consequence of the COVID-19 led country lockdowns. Since then, a moderate recovery occurred as countries partially reopened and households and businesses were supported by fiscal transfers. However, the pandemic entered a second wave towards the end of 2020, which adds to the downside risk in early 2021. Social dis- tancing and country lockdowns weighed more heavily on consumptions of services than on goods consumption, which supported a faster recovery of container trade compared to the broader economy, and at the end of 2020, global container volumes were higher than at the end of 2019. Dynamics in economic activity, trade and demand patterns will be highly dependent on the further development of the COVID-19 pandemic also in 2021 with the roll-out of a vaccine during the year. This development was most noticeable in the US. Despite the ongoing partial lockdown, US per- sonal disposable income rose by 6.3% in 2020, due to fiscal support through the CARES Act to tackle economic implications of COVID-19. The act included recovery rebates and extra unemploy- ment insurance benefits. However, a good part of the higher incomes was set aside as extra sav- ings, and total US consumption decreased by around 4.6% in 2020. The consumption decline was entirely driven by services down by 7.3%, while goods consumption increased by 3.8%. The increase in US goods consumption drove up con- tainer demand in H2. In fact, North American con- tainer imports were 24% higher at the end of 2020, compared to the end of 2019. A similar division of growth between goods and services consumption was recorded in Europe, although European COVID-19 restrictions were tougher and the increase in goods demand was more muted. Going forward, it is highly uncertain if goods consumption will continue to drive up con- tainer demand. The support from higher house- hold income may diminish as unemployment has remained high and consumer confidence is well below pre-COVID-19 levels. Moreover, a continua- tion of the massive fiscal support is uncertain in the near-term, particularly in the US, if political gridlock prolongs decision making. Finally, house- holds' appetite for services, such as travelling, could initially take up a larger share of the wallet than usual if a vaccine becomes widely available and countries reopen later in 2021. The COVID-19 pandemic and economic consequences Global container demand, y/y growth (%) COVID-19, daily new confirmed cases Country lockdowns in the US and Europe lead to sharp contraction in demand Pent-up demand Strong container demand equipment shortages and supply chain bottlenecks drive up ocean freight rates fiscal support and the una- vailability of services lead to strong goods consumption III III Global container volumes equal December 2019 levels 5.3 -3.6 -11.2 Goods demand recovered quickly during country lockdowns As a direct consequence of the COVID-19 pan- demic, household salary income declined in 2020. While a substantial part of the income loss was compensated by extensive supporting fiscal pro- grammes and monetary policy in many countries, total consumption demand suffered, some parts of consumption more than others (chart 1). The country lockdowns in H1 and the subsequent social distancing and travel restrictions led to a collapse in services consumption. At the same time, con- sumers spent a larger part of their income on physical goods such as electronics and furniture on the back of the protected disposable income and pent-up demand. This pattern coincided with a surge in e-commerce. Consequently, the fall in goods demand became much less pronounced than in services demand. Country lockdown in China reduces container flows Q1 1] Q2 22 1.6 60 Q3 Q4

View entire presentation