News Highlights week: 46 - 2023

Most sizes, apart from units of 5,000 teu and over, as well as vessels of 1,500-1,900 teu continue to see faltering charter rates. 
For the first time in three years, the Alphaliner Charter Index (ACI) has fallen below 100 points, reflecting the continued downward trend impacting rates. 

And prospects for container tonnage demand are not bright for the short term with spot cargo rates again falling significantly on many routes after a four week-rally, and carriers increasingly operating at a loss. 

On the supply front, the news remains grim with close to half a million teu of newbuilding tonnage delivered since early September and a lot more due to hit the market in the coming weeks and months. 

On a broader macro environment, inflationary pressures around the world, although easing in a number of countries continue to cap demand for goods, while the wars in Ukraine and in the Near East are impacting business confidence. 

The only piece of good news for carriers is the continued fall in oil prices, due to the numerous uncertainties facing the world economy. 
Another development that needs monitoring are the serious water level problems at the Panama Canal. 

With only 18 vessels allowed to transit per day by February as announced, versus the usual 40, it remains to be seen what impact this measure will actually have on container shipping in terms of possible delays or deviation

Third quarter financial results of several major shipping lines

Net profits for CMA CGM tumbled to just USD 388 M in the third quarter, underlining the rapidity of the collapse in container markets. The result represented less than one-third of its profits three months earlier, and a 95% decline on 2022. 

Results were a mixed bag for the French group: average rates in the quarter were USD 1,322 per teu, a decline of 52% year-on-year, which was at the better end of the range shown by the main carriers - see left. 

However, in contrast to several competitors, the French group did not pick up more volumes, recording liftings of 5.72 Mteu in Q3, a rise of less than 1% on a year earlier.

German carrier Hapag-Lloyd reported a USD 293 M net profit for the latest quarter, but raised the possibility of operating losses in the fourth quarter by setting a new, narrower full-year forecast. 

Q3 revenues were down 58% on the year at USD 4.5bn, while operating profit (EBIT) dropped to USD 228 M. This brought EBIT for the full nine months of the year to USD 3.0 bn

South Korean carrier HMM scraped through with a KRW 95 bn (USD 71.8 M) net profit for the third quarter, indicating likely losses to come, at a time when the company is undergoing a partial privatisation - see box left. 

Container revenue fell 63% to KRW 1.74 bn in the period. However operating profits (EBIT) on container activities plummeted 99% to KRW 21 bn (USD 15.8 M), bringing the results for the full nine months to KRW 384 bn (USD 289 M).

Taiwan’s Yang Ming reported a positive net profit of TWD 2.8 bn (USD 86.5 M) for the third quarter, reversing the deficit seen in Q2. 
The result was a 95% decline on a year ago, while revenues fell 64% to TWD 35.9 bn.

However, the carrier fell into the red at the operating level in the quarter, posting a net operating loss of –TWD 1.4 bn. It is the Taiwanese line’s first operating deficit since Q4 2019.

Taiwan’s largest carrier Evergreen Marine (EMC) logged an operating profit of TWD 8.8 bn (USD 272.9 M) for the third quarter, a drop of 92% on a year earlier.

The world’s seventh largest line generated revenue of TWD 72.8 bn in the period, representing a decline of 57% yer-on-year. However, revenues were up 8% on a quarter-on-quarter basis.

MKT team