Alphaliner predicts record $ 120 billion in profits for container carriers
Major carriers have constantly talked about the extraordinary market that helped them achieve record results in 2021. Now Alphaliner market analysts are quantifying how extraordinary the year has been, predicting record results that could see the top 10 carriers of containers to produce. up to $ 120 billion in EBIT profits (earnings before interest and taxes).
Recently announced third quarter results from the largest publicly traded carriers highlighted the strength of the market. AP Moller-Maersk, as the parent company of the world’s largest publicly traded container line, reported an incredible 355% increase in profits to over $ 5.9 billion for the quarter. Likewise, Hapag-Lloyd reported an almost 10-fold increase in profits to over $ 6.7 billion for the first nine months of the year. CEO Rolf Habben Jansen said these were “extraordinarily strong results”, joining CEOs of other major shipping companies in forecasting that market conditions would remain similar for the remainder of 2021 and through 2022.
Looking at the results reported by carriers, Alphaliner predicts for the full year that the top 10 container carriers remain on track for an EBIT operating profit of between $ 115 billion and $ 120 billion. According to Alphainer, the forecast is “more than six times the amount recorded in 2020 and this is a number that is likely to transform the structure of the industry.”
Following the release of third quarter results, Alphaliner noted that “the ten lines have already generated nearly $ 80 billion in EBIT in the first nine months of the year.” Equally impressive, they reported operating margins of 56%. “This compares to an average operating margin of just 3.7% over the same period two years earlier,” they wrote in their analysis.
The strength of the trans-Pacific market is a major contributor to the industry’s success. As a result, Alphaliner stresses that it is the carriers with the largest percentage of their fleets in the Pacific that benefit the most. For example, Evergreen Marine, Yang Ming and Wan Hai, Alphaliner reports that each has achieved margins above 60% compared to the giants Maersk and Hapag, which barely exceeded 46%, as only a small part of their fleets use the roads. the most lucrative. The market strength has spread to smaller carriers as well, for example financially struggling Pacific International Lines recently said it had returned to profitability due to the extraordinary market.
Some analysts, however, have started to question whether the markets have peaked. Drewry, for example, in his weekly World Container Index reports that the composite index fell 1.5% this week, continuing declines that began in early October. Rates from Shanghai to Los Angeles have fallen nearly four percent and nearly five percent according to reports from New York Drewry. However, they also noted that the composite index remains 196 percent higher than a year ago.
Container lines are using this new strength to accelerate strategic plans. In addition to bringing the order book for new vessels to record levels, Maersk, CMA CGM and Hapag have all announced terminal investments, with Maersk aggressively evolving in its logistics business. CMA CGM also expanded its air freight business while other carriers paid off old debts.
In addition to the continued increase in volumes, which show no signs of slowing down, Alphaliner sees other market conditions including the recent emergence of the Omicron variant of COVID-19 which could ultimately push its forecast for the year. even higher.