Global container shipping industry profits hit a record $63.7 billion in Q2-2022

The latest edition of the McCown Container Report takes the results of publicly listed container shipping lines in Q2, accounting for about two-thirds of global capacity, and analyzes extrapolating these results to the industry as a whole.

The estimated $63.7 billion for Q2 is 123% higher than the $28.6 billion recorded in Q2 2021 and $5 billion from Q1 this year. This was the seventh consecutive quarter of record earnings for the container shipping industry, while two decades earlier companies in the industry had struggled to recoup capital.

With earnings numbers continuing to grow, John McCown, founder of Blue Alpha Capital, raised his full-year forecast for the sector to $245 billion for full-year profit compared with his forecast at the start of the year only $220.5 billion. The $245 billion forecast for 2022 will be 65% higher than the $148 billion profit that shipping lines will achieve in 2021.

However, with the forecast of global container volume falling, spot rates fall and fleet size growth. The growing question is whether margins for container shipping will peak and how steep the decline will be when it does.

Container volume statistics from Container Trade Statistics (CTS) show that container throughput in the second quarter of 2022 has decreased by 1.6% for the leading container lines compared to the same quarter in 2021. However, McCown also noted that container volume shipped worldwide in the second quarter of this year was 45.3 million TEUs, up 6.4% from the previous quarter.

There are different spot rates for container shipping - The Shanghai Container Freight Index (SCFI) was 3,472 in August, down from 4,040 the previous month and a record high there used to be 5,051 in January this year. This index is still many times higher than the level of 1,160 points recorded in August 2020.

McCown appears to have been more optimistic than some market analysts about profits from shipping containers. On September 1, Seatrade Maritime News reported that Parash Jain of HSBC Global Research, had forecast the sector's profits to fall 80% by 2023/24.

On the basis of a $245 billion forecast for 2022, McCown sees second-half profit of $122.6 billion, up from $122.4 billion in the first half, with Q3 expected to be good equal or slightly better than Q2.

“The folks who focus on spot rates and are predicting a near earnings collapse are substituting narrative for analysis and will be proven wrong. We may be at or near the peak, but no earnings collapse is imminent.”

Read more:

• Container ship charter market 'cools down'
• Container freight rates continue to drop sharply on main routes
• Container freight rates from Asia to the US continue to set a new decrease

Source: Phaata.com (According to SeatradeMaritimes)

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