Container shipping lines made record profits of more than US$14 billion last year, but 2011 profits are expected to be “significantly below” those levels.
Photo courtesy of www.gemifoto.com Container shipping lines made record profits of more than US$14 billion last year, but 2011 profits are expected to be “significantly below” those levels. The latest figures from industry analyst Alphaliner show that 2010 was the most profitable year ever for the carriers, with a number reporting record gains, and almost making up for the $15 billion losses they suffered in 2009. The total operating profits of 19 of the top 25 carriers surveyed by Alphaliner reached $11.4 billion last year, following a loss of $13.2 billion in 2009. Alphaliner estimated that the six remaining lines in the top echelons, that do not publicly disclose their financial performance, MSC, Hamburg Sud, PIL, UASC, HDS Lines and TS Lines, made more than $2.5 billion. The analyst said: “Almost all the carriers turned around the past year’s negative results, with only a single carrier – MISC Berhad – suffering losses in 2010. “Average operating margins recovered significantly, to 9%, in 2010 among the main carriers surveyed (excluding MISC), compared with a negative margin, of 16%, in 2009. “Among the main operators, OOCL and Wan Hai have reported the highest margins for the past two years, further reinforcing the view that size does not necessarily translate to better operating margins in this industry.” Zim, NYK Line, K Line and MOL reported the lowest profit margin out of the top 25 carriers. But Alphaliner warned: “The turnaround is expected to be short-lived, as operating margins have crashed in the first quarter of 2011 – especially on the Asia-Europe trade. “2011 earnings are likely to remain significantly below last year’s, with a majority of carriers expected to post negative results in the first quarter. “Lower freight rates and higher operating costs will take their toll on carriers’ margins.” At the end of last week, the Shanghai Containerised Freight Index (SCFI) showed all-in spot rates from Shanghai to Europe had fallen $15 on two weeks ago to $963 per teu, prices from Shanghai to the Mediterranean dropped $18 to $945 and from Shanghai to the US West Coast rates fell $18 to $1,639 per feu. However, to the East Coast, they were up $9 to $2,990 per feu. The rate declines seen over the past few weeks have also prompted industry advisor Drewry to warn that carriers could report losses this year.