Container carrier profits soar on record volumes
PORTS & SHIPPING

Container carrier profits soar on record volumes

According to a new analysis, the global container shipping industry experienced a significant profit increase, surpassing $10 billion in the second quarter, driven by record volumes and rising freight rates following Red Sea diversions. It was reported that net income for the world's major container carriers, including Denmark's A.P. Moller-Maersk A/S and China's Cosco Shipping Holdings Co., nearly doubled from the first quarter and exceeded the $8.88 billion earned in the second quarter of 2023. The report, released on Saturday by industry expert John McCown, suggested that profits for the current quarter might also show a further "material increase" due to the resilience of the international goods trade market. The industry, responsible for transporting 80 per cent of global merchandise trade, saw profits soar during the pandemic amid high consumer demand and Covid-related supply chain disruptions, but returned to a collective loss in the final quarter of 2023, according to McCown's records.

Currently, shipping lines are once again benefiting from favourable supply and demand conditions, leading to a rebound in profits, though these remain well below the pandemic highs. Capacity has become more constrained as Houthi attacks in the Red Sea have forced vessels to take longer routes around southern Africa, contributing to increased spot container rates and congestion at several major ports. Despite these challenges, global volumes reached a record high last quarter of 46.4 million units, measured in 20-foot containers, surpassing the previous record of 46.2 million from the second quarter of 2021, as per figures from Container Trades Statistics Ltd, cited by McCown.

Demand has been particularly strong in the US, where retailers and other importers are increasing their stock levels in warehouses due to concerns about new tariffs on Chinese goods and a potential dockworkers' strike at East and Gulf Coast ports. McCown mentioned in the report that a coast-wide strike, or even a strike at key ports, would significantly disrupt container networks for all the major carriers and could quickly extend beyond routes involving the US.

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According to a new analysis, the global container shipping industry experienced a significant profit increase, surpassing $10 billion in the second quarter, driven by record volumes and rising freight rates following Red Sea diversions. It was reported that net income for the world's major container carriers, including Denmark's A.P. Moller-Maersk A/S and China's Cosco Shipping Holdings Co., nearly doubled from the first quarter and exceeded the $8.88 billion earned in the second quarter of 2023. The report, released on Saturday by industry expert John McCown, suggested that profits for the current quarter might also show a further material increase due to the resilience of the international goods trade market. The industry, responsible for transporting 80 per cent of global merchandise trade, saw profits soar during the pandemic amid high consumer demand and Covid-related supply chain disruptions, but returned to a collective loss in the final quarter of 2023, according to McCown's records. Currently, shipping lines are once again benefiting from favourable supply and demand conditions, leading to a rebound in profits, though these remain well below the pandemic highs. Capacity has become more constrained as Houthi attacks in the Red Sea have forced vessels to take longer routes around southern Africa, contributing to increased spot container rates and congestion at several major ports. Despite these challenges, global volumes reached a record high last quarter of 46.4 million units, measured in 20-foot containers, surpassing the previous record of 46.2 million from the second quarter of 2021, as per figures from Container Trades Statistics Ltd, cited by McCown. Demand has been particularly strong in the US, where retailers and other importers are increasing their stock levels in warehouses due to concerns about new tariffs on Chinese goods and a potential dockworkers' strike at East and Gulf Coast ports. McCown mentioned in the report that a coast-wide strike, or even a strike at key ports, would significantly disrupt container networks for all the major carriers and could quickly extend beyond routes involving the US.

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