Container shipping profits to drop by 80% in 2023/24

According to a report by HSBC Global Research forecasts, a downcycle is unavoidable for container shipping in 2023-24, and profits will fall by 80%. After two years of unprecedented rises, container freight rates were seen as having peaked with a downcycle in 2023 -  2024, driven by overcapacity. However, Parash Jain, Head of Shipping & Ports & Asia Transport Research for HSBC, does not believe the sector will return to losses, which have so often characterized it over the last two decades pre-pandemic.

Jain: “There are signs that spot rates could fall to pre-pandemic levels swiftly on the widening demand-supply gap (as seen in the BDI), but we maintain that contract rates should settle above their pre-pandemic levels and that capacity discipline will keep spot rates from lingering at trough levels.”

He said profits are set to fall from their peak estimated for 2022 but would still be better than in the past. The largest public-listed container line AP Moller – Maersk, has forecast EBITDA of $37bn for 2022.

With a forecast of global container volumes contracting, falling spot rates, and fleet growth, the question is increasingly whether profit levels for container shipping have peaked and how steep the fall-off will be when it comes.

On the volume side, figures from Container Trade Statistics (CTS) showed a 1.6% drop in Q2 2022 volumes from its members – top container lines – from the same quarter in 2021. However, McCown also notes that worldwide loaded container volumes in Q2 this year were 45.3m TEU, up 6.4% from the preceding quarter.


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