Alphaliner forecasts sharp drop in carriers' profits in fourth quarter


Market analysts have noted that carriers could see their fourth-quarter profits drop as much as 70% from the previous quarter's results.

“Indications for the remaining months of the year show carriers are likely to book steeply lower profits in the final quarter, with some potentially falling by up to 70% versus the previous three-month period.” Alphaliner said.

Among the top 10 carriers, Israel's Zim Integrated Shipping Service could face the biggest drop in profits, with Q4 operating profit estimated at $439 million to $739 million, down 50-70% compared to the third quarter, according to the analysis.

For Maersk, Alphaliner believes Q4 earnings before interest and taxes (EBIT) will be about 45% lower than Q3's operating results. For Hapag-Lloyd and Ocean Network Express (ONE), the analysis gave an expected quarterly EBIT decline of 30-60% and 45% respectively.

Amid a slowdown in shipping volumes, container freight rates across routes have fallen dramatically for several months, with contract prices on some routes having dropped to pre-pandemic levels.

“The stabilisation of freight rates was always expected as the rates during the pandemic were unrealistic just as they were prior to it,” said Sunil Vaswani, executive director of the Container Shipping Lines Association (CSLA) in India.

Vaswani further notes, “It's just the speed with which the rates dropped that was unexpected. While on the one hand, the shipping lines increased capacities, on the other, the economic situation in the US, the UK and Europe, increased interest rates and the Russia-Ukraine war, all led to reduced demand."

He went on to further explain, “Be that as it may, the shipping lines will continue to service the trade although redeployment of capacities within the various trade routes & off-hiring of tonnage is something that happens all the time and that is expected to continue so to optimise capacities and service levels.”

 

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Source: Phaata.com (According to ContainerNews)

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