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FILE PHOTO: Containers are seen on the Maersk's Triple-E giant container ship Majestic Maersk, one of the world's largest container ships, as it sails in the Strait of Gibraltar towards the port of Algeciras, Spain January 19, 2023. REUTERS/Jon Nazca/File Photo

FILE PHOTO: Containers are seen on the Maersk's Triple-E giant container ship Majestic Maersk as it sails in the Strait of Gibraltar towards the port of Algeciras, Spain January 19, 2023. REUTERS/Jon Nazca/File Photo

Container Shipping Lines Rake In $8.9 Billion Profit in Q2

The Loadstar
Total Views: 5792
August 31, 2023

By Mike Wackett (The Loadstar) –

The second-quarter results of the major container lines were significantly down from the year before, but nonetheless the stronger carriers still recorded huge profits.

According to John McCown’s analysis, based on the lines that report their financials and taking an average for the carriers that do not, the industry achieved a Q2 cumulative net profit of $8.9bn.

This compares with the all-time record $63bn profit for Q2 22, at the height of the post-pandemic demand boom.

The carrier with the best bottom line, of those that report their results, was French carrier CMA CGM, with a net profit of $1.33bn.

This was followed by Maersk, with $1.29bn, and China state-owned Cosco Shipping, which includes OOCL, with $1.2bn – interestingly, the only company to see a quarter-on-quarter improvement at the ebit stage.

At the bottom of the net earnings pile was Israeli carrier Zim, with a Q2 loss of $162m, and Taiwan’s Yang Ming, which achieved a just below breakeven result of a net loss of $4m.

“This is the fourth straight quarterly downturn after seven straight quarters of record net income for the sector, driven by significant pricing increases across most container lanes,” said Mr McCown.

Indeed, most carriers are ‘banking’ profits made in the first six months of the year and forecasting, at best, breakeven trading in the second half of the year.

Moreover, some of the smaller carriers, such as Zim, can expect to post full-year losses, and will have to navigate a challenging 2024, unless the market improves dramatically in the meantime

However, cumulatively, Mr McCown said he anticipated that while net liner income this year would be “down significantly from 2022”, the total will still be “well above the record profit levels prior to the pandemic”.

He explained: “Since the 2008 financial crisis, the container shipping sector has experienced generally poor overall results, owing to chronic overcapacity. The pandemic materially changed the supply/demand dynamic that drives sector pricing, primarily through congestion that had the effect of constraining supply.”

Alphaliner, meanwhile, focused on Q2 carrier operating margins for its analysis. It said: “Average operating margins for the leading container carriers [the nine largest companies reporting ebit] fell into single digits for the first time in three years in the second quarter of 2023, coming in at 8.9%.”

The consultant’s analysis showed Cosco had been the only carrier to have bucked the trend and improved its sequential operating margin in Q2, going from 20.3% in Q1 to 27%. And it noted that Cosco Shipping, including OOCL, had managed to cut its operating costs by a huge 37% in the first half of this year, compared with H1 22, to achieve this above-industry-par result.

The drive included a massive 55% saving in the Shanghai-based group’s equipment and cargo transport costs over the previous year, which will be the envy of its peers, as they too look to slash operating costs.

Commenting on the Cosco numbers, a carrier contact told The Loadstarthe savings were “hard to believe”, adding: “Either they found a big black hole in their equipment and transport costs, or they stopped moving boxes around.”

The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

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