Margins of container shipping lines dropped sharply compared to pre-Covid-19 pandemic levels

According to Alphaliner, the latest financial reports of leading container shipping lines show that their average operating profit margin fell to a very low level of 1.5% in the third quarter of 2023, lower than the average of 2.4% in 2019, a year before the Covid-19 pandemic began.

China's COSCO Group continues to lead the way while maintaining strong margins, with an operating margin of 15.8%, supported by a sweeping cost-cutting program that reduced spending. In terms of profits, the COSCO group is on par with other carriers, with revenue down 60% due to no increase in output.

Overall, five carriers reported positive operating profits and margins in the third quarter of 2023: COSCO, Evergreen, Hapag-Lloyd, ONE and HMM.

In the third quarter of 2023, shipping lines including Maersk Line, Yang Ming, Wan Hai and ZIM reported losses, of which US-listed ZIM had the lowest profit margin, negative 16.7%.

Alphaliner claims that the Israeli carrier is suffering from high rates on its charter fleet and is under additional pressure in the spot market, where falling freight rates are wiping out profits from increased volumes.

As confirmed in previous earnings results, the yield trend continues to be positive as demand increases. Carriers show higher increases in Q3 2023, compared to Q3 2022 and Q2 2023.

With 95% of its fleet consisting of chartered-in tonnage – the highest percentage of chartered vessels in the industry, while most carriers typically operate a more balanced fleet of owned and chartered vessels – ZIM continues to struggle with highest rent signed during the pandemic.

Among the chartered vessels, the Haifa-based company has the 9,469 TEU ZIM Yantian and ZIM Shanghai on fixed charter until June and July 2025 at a fixed charter rate of $72,700/day. This compares with typical charter rates of $36,000 for vessels of this type today.

Many carriers are likely to fall into the red in the fourth quarter, as Maersk Line, Hapag-Lloyd, ONE and ZIM have already acknowledged the possibility of losses in the fourth quarter of 2023.

Read more:

• ZIM reports loss of more than 2.2 billion USD in third quarter of 2023
• Falling container freight rates dragged down CMA CGM's third quarter financial results
• Container rates on the US route dropped as shipping lines added more capacity

Source: Phaata.com (According to ConainerNews) 

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