Drewry has shared a positive outlook for container shipping companies' end of year profits after combined operating losses amounted to US$16 million in Q1 for 2017.
The consultancy's Container Insight Weekly reported that market recovery towards an industry operating profit of around $1.5 billion in 2017 will start from the second quarter onwards when new contracts roll over.
Drewry stated: “We see no reason to downgrade our profit guidance and will most probably raise it for the next Container Forecaster.
“Exceptionally strong demand growth in Q1, 2017, and far higher annual contract rates will create even more profitable conditions for the remainder of the year than we had envisioned.”
Drewry’s sample of 13 carriers’ Q1 2017 financial reports has shown that five have turned a profit in the period with a wide gap between the best performing line (CMA CGM with an operating margin of 5.5%) to the worst (HMM at -10.1%).
3-month 2017 scorecard: comparison of EBIT margins, revenue of selected carriers
Source: Drewry Maritime Research, derived from ocean carrier financial reports
Drewry’s view is shared by Maersk Line’s CEO Søren Skou.
Even after a dissatisfying first-quarter result for 2017, Skou stated that spot and contract rates gaining traction meant that the world’s largest ocean freight carrier could deliver a $1 billion profit over 2016.
Drewry commented: “The disparate set of results is perhaps the most interesting takeaway from the first reporting season of the year, showcasing how despite claims the industry is increasingly becoming commoditised there remain significant differences between companies in terms of scale, cost structures, trade coverage, customer base and spot-contract ratios.
“Over time, as the effects of M&A filter through, it is likely that we will see greater homogenisation of operating margins.
“Carriers will have to wait slightly longer than expected for the profits to roll in, but all the indications are that they will be very pleased with the results from the second quarter onwards.”