The 10 leading publicly listed container shipping lines are on track to earn a record $115 billion to $120 billion in profit in 2021, a windfall that could transform the structure of the industry as those earnings are reinvested, shipping intelligence provider Alphaliner said Dec. 1.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
"The 10 lines have already generated nearly $80 billion in EBIT in the first nine months of the year, while the recent emergence of the omicron variant could ultimately push these forecasts even higher," Alphaliner said.
Taiwanese shipping companies posted the largest profits due to their heavy exposure to the lucrative trans-Pacific trade lanes. Evergreen Marine, which operates 34% of its fleet in the trans-Pacific market, reported an EBIT of 67% of its revenue in the third quarter of 2021, followed by Yang Ming at 66% and Wan Hai at 61.5%, according to Alphaliner.
"The 'tail' on the container boom has continually defied forecasts with several players initially predicting that the boom would peter out after the 2021 Chinese New Year," Alphaliner said.
The largest shipping lines operate more of their fleet on shipping routes outside the Pacific and have lower exposure to the spot market. Germany's Hapag-Lloyd reported a third-quarter EBIT of 46.5% and was only allocating 12% of its fleet to the Asia-to-North America market, according to Alphaliner. Copenhagen-based A.P Moller Maersk similarly recorded a third-quarter operating margin of 46.1% and devoted just15% of its fleet to trans-Pacific trade lanes.
The second-largest shipping firm behind Maersk, Geneva-based MSC, is privately held and does not release its financial reports.
Shipping firms are using their record earnings in the pursuit of different strategic goals, Alphaliner said. Evergreen and MSC have focused on expanding their fleets, with MSC poised to overtake Maersk as the largest container shipping company in the world as its current orderbook hits the water. Hapag-Lloyd and France's CMA CGM are paying down debt, while Maersk is expanding into land transportation logistics.
Another result of the windfall earnings of shipping lines will be the privatization of South Korea's HMM in 2022, Alphaliner said. The likely buyer would be one of the country's conglomerates as overseas buyers are not eligible.
"The South Korean government took over HMM, then called Hyundai Merchant Marine, in 2016 effectively saving it from bankruptcy," Alphaliner said. "HMM is now aiming to become part of the select group of 'super carriers' with fleet capacity above 1 million TEUs.