Asian container shipping lines have a sudden increase in profits in the H1 of the year

A container ship of OOCL Shipping Line (Photo: OOCL)

Hong Kong-listed Orient Overseas (International) Ltd (OOIL), which owns OOCL shipping line, reported a spike in first-half net profit to $2.81 billion from $155 million in the same period 2020. With earnings before interest and taxes (EBIT) of $2.85 billion, OOCL had an EBIT of 40.8%.

Revenue also more than doubled in the first half of 2021 to $6.99 billion from $3.43 billion a year ago.

OOCL listed a series of known operational challenges today such as port congestion, lack of empty containers, Covid prevention at container terminals, labor disputes and similar issues associated with a sharp increase in demand and lead to a lack of capacity.

“Despite our efforts to increase capacity, supply and demand have been in severe imbalance as a result of both stronger-than-expected demand and also the numerous operational challenges,” OOCL said.

“These market forces have put upward pressure on freight rates on most tradelanes, and it is these market forces, in addition to our usual careful attention to cost control, that have driven the strong profitability that has been achieved during the period.”

The increase in demand and freight rates is not restricted to long distances and short feeder routes. RCL (Regional Container Lines) - an intra-Asia carrier - reported a profit for the second quarter of 2021 of THB 3.2 billion ($96.12 million), up 14 times compared to the same period last year. In the first half of 2021, profit reached THB 6.1 billion compared to THB 228 million in the same period of 2020.

The Thailand-listed container carrier says its second-quarter container freight rates increased by an "incredible" 78%, and as a result its second-quarter 2021 revenue doubled year-on-year to 7.9 billion THB.

Meanwhile, South Korean shipping line HMM reported its highest-ever operating profit of 2.41 million KRW ($2.05 billion) compared with 136.7 billion KRW in the first half of the year 2020. Revenue also increased by 98.4% in the first half of 2021 to 5.33 million KRW.

Forecasting the market in the near term, HMM said: “The highly elevated freight rates are expected to last through this year at the least. The global supply chain will remain strained, resulting from terminal congestions in major ports, the shortage of both vessel space and containers, and increased cargo demand.”

And it's a similar picture for ZIM (ZIM Integrated Shipping Services), Israel's shipping line, which reported a net profit of $888 million in the second quarter of 2021 compared with $25 million in the same period a year ago.

ZIM reported that average freight rates in the second quarter increased 119% year-on-year to $2,341/TEU. Revenue increased 200% in Q2 2021 to $2.38 billion, compared with $795 million in Q2 2020.

Eli Glickman, President and CEO of ZIM commented: “Driving our success, we have further leveraged digitalization initiatives and have drawn on our global-niche strategy to launch new lines to address profitable, underserved routes. This was instrumental in driving our all-time high results, as ZIM’s second quarter carried volume increased by 44% year-over-year, substantially higher than market growth.”

Read more:

• Hapag-Lloyd increased profits nearly 10 times in the first 6 months of the year
• ONE forecasts a profit of 6 billion USD in the first 6 months of the year
• Maersk reports record business results for Q2 and expects Q3 to be even better
• Container freight rates under long-term contracts increased to a record 28.1% in July

Source: Phaata.com (According to SeatradeMaritime)

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