Container line profits exceed all records

Date Added: 30 March 2023

Container line profits exceed all records

Davies Turner has offered LCL and FCL container shipping services around the world since the dawn of containerisation, and notes a report on the Splash247 website that suggests that liner shipping companies have made greater operating profit in the past three years than the combined profits of the previous 63-year history of container shipping, according to new analysis by Sea-Intelligence.

Sea-Intelligence experts have estimated the liner sector made an EBIT of USD208 billion last year, having racked up USD164 billion, and USD24 billion in 2021 and 2020 respectively.

“While it is hard to estimate historical industry EBIT, by our best estimates, the carriers have over the past three years made far greater operating profits, than they did in the combined previous 63 years, since the maiden voyage of the first container ship,” Sea-Intelligence noted in its latest weekly report.

Analysts remain divided on liner profitability in 2023, a year which has started with many doom and gloom headlines.

UK consultants Drewry estimated in Splash’s annual container forecast report published at the start of the year that the sector would make a profit of USD15 billion this year.

John McCown, whose Blue Alpha Capital quarterly liner profit reports have become essential reading during box shipping’s record earnings run since 2020, anticipates that the carriers will be profitable in 2023 with a net income to revenue margin in double digits but with aggregate quarterly profit levels below the Q4 level recorded in 2022.

Multiple container indices have been on a downward curve for many months with no firm evidence that the market has bottomed out yet.

Earlier this month Peter Sand, chief analyst at freight rate platform Xeneta, told Splash: “We see 2023 as a year of excessive capacity management by the carriers,” going on to list the likely order of defensive measures the lines will issue from their playbook: blank sailings, swiftly followed by cold idling, and finally demolition.”

Container ships are also travelling more slowly this year. The latest data from Clarksons Research shows the average container ship speed in the year-to-date versus 2022 is down by 3.5%.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact ocean@daviesturner.co.uk or visit the relevant pages of this website.