Shipping lines have created income and profit records in the last seven quarters, from the first quarter of 2021 (2021Q1) to the third quarter of this year (2022Q3). This industry’s yearly profit
reached hundreds of billions of dollars in the last two years.
The skyrocketing freight rate amid the Pandemic Covid -19 outbreak has helped them to enjoy high income and profit in a year. Throughout the pandemic, container shipping has benefitted from significant price increases across most lanes as strong consumer demand and widespread port congestion drove freight rates to record.
This year, global liner shipping is predicted to post a full-year net profit of $223.4bn in 2022, a 50.6% improvement over the record profits made last year (2021).
The top 10 lines have collectively pulled in nearly $260bn in operating profit (EBIT) since the pandemic’s start on April 1, 2020, according to Alphaliner.
The container shipping industry earned $58.9 billion in profit in the third quarter, breaking a streak of seven straight record quarters for the sector and further confirmation that the industry’s earnings peak is now firmly in the rearview.
While the $58.9 billion is 22.4% higher than the $48.1 billion profit from last year’s third quarter. It is 6.6% lower than the $63.7 billion earned in this year’s second quarter, making for a slight sequential earnings downturn expected to continue in the months and quarters ahead as overall aggregate pricing in the sector continues to ease.
The Q222 actual results can now be recognized as the peak in earnings,” McCown said.
But, the party seems to end in the fourth quarter this year (2022Q). The peak of an epic cycle was passed by the middle of this year, attention is turning to how severe the drop in profits could be in the coming quarters. Alphaliner is warning carrier results could fall up to 70% in the fourth quarter.
“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 suggested in its latest weekly report.
Long-term ocean freight rates suffered a steep month-on-month decline in November as subdued spot prices, weak demand, and ongoing economic uncertainty caught up with contracted container agreements.
Read ISG Cover Story December 2022: https://theshippinggazette.com/the-biggest-vessel-ever-calls-to-jakarta/
