Top 10 box lines report record positive quarter
Despite lower revenues and tonnages compared with last year, for the first time since 2010 each of the leading 10 shipping lines that report their financial results made an operating profit per TEU transported, container shipping analyst Sea-Intelligence has highlighted.
Sea-Intelligence noted that all of the top 15 carriers that publish financial reports published their second-quarter (Q2) figures in the past few weeks, together achieving record combined earnings before interest and tax (EBIT) of US$2.7 billion.
Alan Murphy, CEO of Sea-Intelligence, said looking at their financial performances, the shipping lines “have been able to navigate these uncertain times rather well”, adding: “This has to be the result of a combination of cost cutting and higher freight rates, as nearly all carriers recorded a year-on-year (Y/Y) decline in revenues, all carriers recorded a Y/Y decline in transported volumes – both globally, and on Transpacific and Asia‑Europe – and nearly all carriers recorded a higher freight rate compared to 2019‑Q2.”
Examining their results, Murphy said that in 2020-Q2, “all 10 reporting shipping lines reported a positive EBIT/TEU”, which “basically means that the shipping line is making an operating profit for every TEU transported”, he noted.
“Even HMM, which has had profitability challenges in the past, recorded a positive EBIT/TEU of $129/TEU. In fact, HMM’s EBIT/TEU was the same as that of Maersk.”
Hapag-Lloyd recorded the largest EBIT/TEU of $146/TEU, with only four of these 10 carriers recording an EBIT/TEU of less than $100 USD/TEU.
“This is the first time since 2010 that all reporting carriers have had a positive EBIT/TEU,” Murphy said, although he noted that there were not enough reporting carriers in 2010.
“This is a very positive development for the shipping lines as the pandemic did not impact container shipping to the extent that was initially feared. Industry focus will likely now be on Q3, which is the peak cargo season.”
Volumes returning to year-on-year growth
As reported last month, analysis by Sea-Intelligence suggests that global ocean freight volumes may return to year-on-year growth in August and September, with the improving demand outlook for the second half of the year also expected to lead to higher profits for container lines compared with last year.
Sea-Intelligence’s forecasts use modelling to predict medium-term global ocean freight volume changes, using the planned capacity supply or service cancellations of carriers as an indicator of the underlying volume developments – methodology that it claims has closely tracked actual volume developments, “as seen during the pandemic from February to June”.
Its method indicates that although global container volumes are expected to show a decline in July, year over year (Y/Y), “we are looking at a prospective Y/Y growth in August and September. For the entire third quarter, we expect a Y/Y demand contraction, but by a marginal -0.1%, pulled down by the developments in July,” Sea-Intelligence said.
According Lloyd’s List, the latest data from a separate container shipping source also indicates that global containerised freight levels in July were only marginally below comparative figures last year, while volumes on the transpacific and Far East-Europe trades came in above their 2019 level.
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