Carriers suffer $15 billion hit in profits

Growing divide in profitability among shipping carriers

The financial and volume data for Q4 2022 from carriers have exposed a noticeable drop in profitability, indicating a growing disparity between larger and smaller players in the market.

According to the latest analysis from Sea-Intelligence, the shipping industry recorded a combined EBIT of $138 billion in the 2022 fiscal year – excluding CMA CGM, PIL, and MSC, which did not publish their EBIT reports.

Despite this impressive figure, the shipping market exhibited visible signs of weakening.

None of the shipping lines were able to grow their EBIT, with five carriers experiencing a Y/Y EBIT decline between $1 and $2 billion, and three experiencing a decline of over $2 billion.

Combined, this resulted in a staggering Y/Y EBIT decline of 46 per cent, or $15 billion, as Sea-Intelligence reported.

READ: 2022 carrier profits primed to hit $200 billion

This trend was also reflected in the EBIT/TEU figures. While the larger carriers maintained their EBIT/TEU levels similar to those of Q4 2021, the smaller carriers were not able to replicate the windfall of the previous year.

On average, the carriers recorded an EBIT/TEU of $843 in Q4 2022, which was a 33 per cent decline from the $1,252 recorded in the last quarter of 2021, but still significantly higher than the $17.6 average from years prior.

© Sea-Intelligence

Additionally, Sea-Intelligence found a strong Y/Y volume decline in both the Transpacific and Asia-Europe regions, with all reporting carriers experiencing varying degrees of volume contraction on a global level.

HMM, on the other hand, “disrupted the market to some extent” with an 8 per cent growth in volume Y/Y.

READ: Asia-Europe carriers outpace Transpacific in capacity planning

The latest trends in the shipping industry indicate a difficult market for carriers in the coming months, as the aftermath of the COVID-19 pandemic continues to impact economies worldwide.

However, there is hope for the industry as it moves towards building more resilient supply chains, a key topic explored in PTI’s latest e-journal. Our experts highlight the pandemic’s unexpected push towards digitalisation as a means of achieving this resilience in the face of turbulent times.

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